BENGALURU (Reuters) – India’s Apollo Tyres missed first-quarter profit expectations on Wednesday, hurt by weak domestic demand and higher rubber costs.
The tyre maker’s consolidated profit fell about 24% to 3.02 billion rupees in the April-June period, missing analysts’ average estimate of 3.86 billion rupees, per LSEG.
Revenue rose 1.5% to 63.35 billion rupees.
KEY CONTEXT
Auto ancillary companies benefit from higher automobile sales and production. For the April-June period, car makers’ sales to dealers rose at their slowest pace in at least two years.
Input costs including that of rubber, rose 7%, pushing Apollo Tyres’ overall expenses higher by about 4% in the quarter.
Rival CEAT’s quarterly profit topped estimates on price hikes and healthy demand in the replacement market that helped outweigh higher rubber costs.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBITD Revenue Profit Mean No. Stock to Div yield
A growth growth (%) ratin of price (%)
(%) g* analy target**
sts
Apollo Tyres 15.89 7.73 7.40 12.19 Buy 23 0.96 1.16
CEAT 15.40 7.19 9.93 4.31 Buy 14 0.89 1.15
MRF 26.70 13.50 8.19 4.37 Sell 4 1.24 0.15
JK Tyre & Industries 10.58 6.40 7.05 18.37 Buy 5 0.74 1.12
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
— $1 = 83.9200 Indian rupees
(Reporting by Nandan Mandayam and Dimpal Gulwani in Bengaluru; Editing by Eileen Soreng)
