1 November 2021
2QFY22 Results Update | Sector: Automobile
Apollo Tyres
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
APTY IN
635
140.1 / 1.9
261 / 139
-4/-22/6
1825
CMP: INR221
TP: INR280 (+27%)
Buy
Strong revenue growth dilutes cost inflation
Need 3–5% price hike to offset cost inflation; EU ops on strong footing
Apollo Tyres (APTY)’s 2QFY22 operating performance was in-line, supported
by volume recovery and price hikes. Demand recovery as well as consistent
price hikes would drive margin recovery in India. EU profitability is expected
to sustain, driven by operational restructuring.
We cut our FY22E consol. EPS by ~20%, factoring in RM cost inflation, but
we largely maintain our FY23 estimates. We maintain a
Buy
rating.
Consolidated performance:
Revenue grew 18% YoY (11% QoQ) to INR50.8b
(v/s est. INR48.7b). EBITDA declined 10% YoY (+13% QoQ) to INR6.4b (v/s
est. INR6.6b). Adj PAT grew 37% YoY/QoQ to INR 1.77b (v/s est. INR1.8b).
Standalone
revenue growth was strong at 25% YoY (13% QoQ) to INR36.5b
(v/s INR33.8b), driven by 13% volume growth.
The gross margin declined 160bp QoQ (9.7pp YoY) to 32.6% (v/s est. 35%),
impacted by higher-than-estimated cost inflation. The EBITDA margin
declined 8.6pp YoY (-10bp QoQ) to 10.3% (v/s est. 11.7%). Adj PAT declined
59% YoY (31% QoQ) to INR900m (v/s est. INR1b).
Revenues for Europe operations
grew 6% YoY (+21% QoQ) to EUR138m (in-
line), driven by 4% YoY volume growth. The EBITDA margin expanded
830bps YoY (+130bp QoQ) to 17.6% (v/s est. 16.5%), driven by the mix.
India demand:
Strong demand momentum is seen across key
segments/channels, and demand from Truck and Bus (T&B) OEMs is also
showing signs of recovery. Truck-Bus Bias (TBB) is growing faster than
Truck-Bus Radial (TBR) in the Replacement category on account of lower
costs; however, TBR should also pick up on the back of growth in OEMs.
RM cost inflation:
It stood at 5% QoQ in 2QFY22; smaller inflation is
expected in 3QFY22.
Pricing action:
It took a price increase of 3–7% in 2QFY22 (3–4% in 1QFY22)
and another 3–5% over Oct–Nov’21. It would need another 3–5% price hike
to offset the cost inflation to date. The pricing environment is conducive,
and the management is confident of passing on the cost inflation gradually.
EU demand outlook:
Healthy demand momentum would continue with an
increase in premiumization. It gained market share in the TBR and Off-
Highway Tyres (OHT) segments as well as across segments.
Capex
for FY22 remains unchanged at INR20b at the consol. level (INR11b
complete up to 1HFY22), with no change in the guidance.
Net debt stood at INR50b (v/s INR48b in 1QFY22) on higher inventory.
APTY offers the best blend of earnings growth and cheap valuations. The
stock trades at 15.4x/9.7x FY22E/FY23E consolidated EPS. We maintain BUY,
with TP of INR280 (~12x Sep’23E consol. EPS).
Financials & valuations (INR b)
Y/E March
FY21 FY22E
Sales
172.8 206.7
EBITDA
26.8
27.1
Adj. PAT
6.6
8.2
EPS (Rs)
11.5
14.4
EPS Growth (%)
38.1
24.8
BV/Share (Rs)
200.0 210.3
Ratios
RoE (%)
6.2
7.0
RoCE (%)
5.4
6.3
Payout (%)
57.2
28.0
Valuations
P/E (x)
19.2
15.4
P/BV (x)
1.1
1.0
Div. Yield (%)
1.6
1.8
FCF Yield (%)
10.2
11.8
Shareholding pattern (%)
As On
Sep-21 Jun-21
Promoter
37.3
37.6
DII
19.6
17.2
FII
20.5
22.9
Others
22.6
22.3
FII Includes depository receipts
Raw material cost inflation hurts margins
FY23E
233.6
35.1
13.0
22.7
58.0
228.5
10.3
8.6
19.8
9.7
1.0
2.0
12.7
Highlights from management commentary
Sep-20
41.8
17.4
20.0
20.9
Valuation and view
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com)
Research Analyst: Vipul Agrawal
(Vipul.Agrawal@MotilalOswal.com) /
Aniket Desai
(Aniket.Desai@motilaloswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
3 September 2019
1
 Motilal Oswal Financial Services
Apollo Tyres
Consolidated - Quarterly Earnings Model
Y/E March
FY21
1Q
2Q
3Q
4Q
Net Revenues
28,817 42,949 50,797 50,257
YoY Change (%)
-33.5
7.8
15.5
39.0
EBITDA
2,456 7,070 9,152 8,147
Margins (%)
8.5
16.5
18.0
16.2
Depreciation
3,091 3,308 3,273 3,477
Interest
1,172 1,167 1,049 1,042
Other Income
185
262
228
619
PBT before EO expense
-1,622 2,857 5,058 4,246
Extra-Ord expense
0 6,009 -1,095
13
PBT
-1,622 -3,153 6,153 4,234
Rate (%)
17.0
21.9
27.9
32.2
Reported PAT
-1,346 -2,463 4,438 2,873
Adj PAT
-1,346 1,287 3,755 2,880
YoY Change (%)
-195.1
55.0 115.9 269.9
Margins (%)
-4.7
3.0
7.4
5.7
E: MOFSL Estimates
Standalone (India)
Net Revenues
YoY Change (%)
EBITDA
Margins (%)
Adj PAT
YoY Change (%)
Europe (derived)
Net Revenues
YoY Change (%)
EBITDA
Margins (%)
Adj PAT
YoY Change (%)
Source:MOFSL Estimates
(INR m)
1Q
45,845
59.1
5,668
12.4
3,404
1,046
405
1,623
9
1,613
20.8
1,278
1,285
-195.5
2.8
FY22
FY21
FY22E
2Q
3QE
4QE
50,773 56,392 53,664 1,72,820 2,06,674
18.2
11.0
6.8
5.7
19.6
6,380 7,595 7,467
26,825
27,110
12.6
13.5
13.9
15.5
13.1
3,397 3,510 3,548
13,150
13,859
1,036
995
951
4,430
4,028
289
280
323
1,294
1,297
2,236 3,370 3,291
10,539
10,520
44
0
0
4,927
54
2,192 3,370 3,291
5,612
10,466
20.7
22.9
22.4
37.6
22.0
1,738 2,598 2,555
3,502
8,141
1,766 2,598 2,555
6,577
8,183
37.2
-30.8
-11.3
38.1
24.4
3.5
4.6
4.8
3.8
4.0
2QE
48,719
13.8
6,557
13.5
3,465
1,000
280
2,372
0
2,372
23.6
1,812
1,812
40.8
3.7
17,725 29,116 33,041 36,296
-42.9
4.9
20.0
49.3
1,905 5,496 6,178 5,606
10.8
18.9
18.7
15.4
-536 2,197 2,568 2,253
-135.8 120.2
96.5
75.5
32,200 36,497 37,667 38,864 1,17,334 1,45,227
81.7
25.4
14.0
7.1
6.1
23.8
3,336 3,762 4,117 4,664
20,343
15,879
10.4
10.3
10.9
12.0
17.3
10.9
685
900 1,104 1,453
7,632
4,303
-227.7
-59.0
-57.0
-35.5
49.7
-43.6
33,759
16.0
3,941
11.7
1,018
-53.7
11,093 13,833 17,756 13,961
-9.6
14.2
7.9
17.9
551 1,574 2,974 2,541
5.0
11.4
16.7
18.2
-809
-910 1,187
627
874.9 444.7 174.4 -224.3
13,645 14,276 18,725 14,800
23.0
3.2
5.5
6.0
2,332 2,618 3,478 2,802
17.1
18.3
18.6
18.9
600
866 1,494 1,102
-174.2 -195.1
25.9
75.6
55,486
5.0
6,481
11.7
-1,055
214.0
61,447
10.7
11,231
18.3
3,879
-467.7
14,960
9.0
2,616
17.5
794
-187.3
Highlights from management commentary
India operations
India demand:
Strong demand momentum is seen across key
segments/channels, and demand from T&B OEMs also seems promising. TBB is
growing faster than TBR due to lower costs; however, TBR should also pick up
with growth in OEMs.
RM cost inflation:
It stood at 5% QoQ in 2QFY22; smaller inflation is expected in
3QFY22.
Pricing action:
It took a price increase of 3–7% in 2QFY22 (3–4% in 1QFY22) and
another 3–5% over Oct–Nov’21. It would need another 3–5% price hike to offset
the cost inflation to date.
The Vredestein brand
was launched in India and would help the company make
inroads in high-margin premium segments.
Capacity utilization
stood at ~80% for 1HFY22, with TBR at 74% (PCR at 97%).
Exports:
It achieved the highest quarterly exports ever in 2QFY22 (up by 70%
YoY; includes exports to the EU).
1 November 2021
2
 Motilal Oswal Financial Services
Apollo Tyres
Europe
Demand:
The healthy demand momentum would continue with an increase in
premiumization. Volumes grew 4% during the quarter at capacity utilization of
86%. PCR grew in the low double digits, and growth in TBR came with market
share gains.
Volumes grew 4% and revenue growth was in line with that of the market, as it
had to let go of some opportunities due to the associated freight charges.
It took a price increase of ~2% during the quarter, of which 4–6% was in TBR,
Agri, and Industrial. It would take price hikes in 3Q and 4Q as well to offset the
RM cost inflation.
It witnessed further improvement in the sales mix – Ultra High Performance
(UHP) / Ultra Ultra High Performance (UUHP) accounted for ~39% of Passenger
Car and Light Truck (PCLT) sales/volumes v/s 38% in 1QFY22. It expects this to
further rise to over 40% by FY26.
It had taken write-offs on fixed assets in 2QFY21. The Netherlands plant would
continue to be a strategic plant for EU operations as premium PCR tyres and
some other tyres are manufactured at this plant.
Others
Capex
for FY22 is estimated at INR20b at the consol. level (INR11b complete up
to 1HFY22), while the guidance remains the same.
The increase in inter-segment is attributable to a) RM sourcing from SG and b)
India supplying to the EU.
1 November 2021
3
 Motilal Oswal Financial Services
Apollo Tyres
Key exhibits
Exhibit 1: Consol. revenue trend
Consol. Revenue(INR b)
Growth YoY %
59.1
39.0
28.8
7.8
15.5
18.2
Exhibit 2: Trend in India revenues
India revenue (INRb)
Growth YoY
82
49
25 17
8
1
-11 -12 -21
-43
5
20
25
22.5
16.5
6.0
1.0
-15.4
-33.5
42.6 47.2 42.7 43.3 39.9 44.0 36.2
42.9 50.8 50.3 45.8 50.8
-6.4 -6.8
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: Trend in EU operations performance
Europe Revenue (EUR m)
EBIDTA margin (%)
Exhibit 4: Consol. PAT and PAT growth trend
Consol. PAT(INR b)
1.6 1.4 0.8 1.7
0.8
Growth(%)
1.3 1.8
17.8
13.1
8.0
9.5
6.0 6.7 6.7
2.2
9.3
9.4
9.3
16.3
17.6
1.8 2.4
1.3 3.8 2.9
-1.3
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: Trend in India gross margins (%)
India Gross Margins(%)
35.5 32.9 34.0
40.4 38.5 42.3 41.2
38.6
36.8 37.1 39.1
Exhibit 6: Trend in EU (derived) gross margins (%)
Europe Gross Margins(%)
63.7
34.2 32.6
56.0
61.6 60.1 58.9
61.8
51.5
57.1
51.3
55.1
62.0 63.0 64.1
Source: MOFSL, Company
Source: MOFSL, Company
Valuation and view
India poised for growth:
APTY is well-placed with a strong competitive
positioning as well as ready capacities to benefit from robust recovery in TBR
and PCR in both the OEM and Replacement segments. On fully expanded
capacity by FY22-end, its PCR/TBR utilization is estimated at 71%/62%. We
estimate an 11% volume CAGR over FY21–23E, led by strong growth in the TBR
4
1 November 2021
 Motilal Oswal Financial Services
Apollo Tyres
and PCR segments and a 6% CAGR improvement in price realizations. We
estimate a ~17% revenue CAGR over FY21–23. APTY’s India business has several
levers to support margins and dilute the impact of RM cost inflation. These
include: a) operating leverage, b) increasing share of the most efficient AP plant
(not factored in), and c) likely benefit from PCR exports to the EU, with PLI
benefits (not factored in). We expect 340bp decline in FY23 EBITDA margins (to
13.9%) over FY21 levels (due to high RM cost). Nonetheless, operating leverage
and balance sheet deleveraging would drive a PAT CAGR of ~6%.
EU – worst is behind:
Its EU operations are set for a turnaround, led by strategic
initiatives at the front end (product side) and back end (Hungary plant and
restructuring in the Netherlands). With improved competitiveness, APTY has
gained market share in the Replacement segment and made inroads with OEMs.
With a further ramp-up at the low-cost Hungary plant and specialization at the
Netherlands plant, we estimate a 12% revenue CAGR over FY21–23 (on a low
base) and ~510bp EBITDA margin expansion to 17.5% by FY23E. We estimate EU
operations to turn profitable by FY22E.
Leaner balance sheet augurs well for future growth capex:
APTY raised funds
through a preferential placement to an arm of Warburg Pincus. In Feb’20, it
issued compulsory convertible preference shares (already converted to equity)
equivalent to a 9.93% stake in the company for INR10.8b (at INR1,713/share).
After this fund infusion as well as FY21 FCF (post interest) of ~INR9.5b,
consolidated net debt stood at INR50b as of Sep’21 (v/s INR61b as of Mar’20).
Net debt would be comfortable at 0.3x/0.2x equity for FY22E/FY23E and
1.2x/0.6x EBITDA.
Expect ~40% consolidated PAT CAGR over FY21–23:
Driven by strong growth
across its India and Europe operations, APTY is likely to deliver a 16% revenue
CAGR over FY21–23E. We estimate the gross margin to trend downward by
~280bp over FY21–23 (44.4% in FY20). The benefit from the restructuring of its
EU operations and operating leverage in India and the EU would drive a 10bp
consolidated EBITDA margin expansion to 15%. This implies a 14% EBITDA CAGR
over FY21–23E. With a reduction in interest costs due to the debt reduction, we
estimate an adjusted PAT CAGR of ~40% over FY21–23. As a result, we estimate
a 420bp improvement in RoE over FY21 to ~10.3% in FY23E.
Valuation and view:
APTY is geared up for the next leg of growth, with sufficient
capacity to cater to demand from India and Europe. With capex for Phase 2 of
the AP plant concluding in FY22E, an increase in capacity utilization would
generate higher cash flows and further deleverage the balance sheet. Compared
with peers, APTY offers the best blend of earnings growth and cheap valuations.
The stock trades at 15.4x/9.7x FY22E/FY23E consolidated EPS. We value APTY at
12x Sep’23E EPS (v/s a 5-/10-year average P/E multiple of ~16x/12x). We
maintain Buy, with TP of INR280.
1 November 2021
5
 Motilal Oswal Financial Services
Apollo Tyres
Exhibit 7: Change in estimates
(INR m)
Net sales
EBITDA
EBITDA (%)
Adjusted PAT
EPS (INR)
Rev
2,06,674
27,110
13.1
8,210
14.4
FY22E
Old
2,07,039
30,192
14.6
10,313
18.0
Chg (%)
-0.2
-10.2
-150bp
-20.4
-20.4
Rev
2,33,577
35,068
15.0
12,969
22.7
FY23E
Old
2,26,606
35,454
15.6
13,236
23.1
Chg (%)
3.1
-1.1
-60bp
-2.0
-2.0
Exhibit 8: One-year forward P/E
30.0
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 9: One-year forward P/B band
26.6
17.8
12.2
3.0
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
2.2
2.0
20.0
1.6
1.2
0.9
0.4
10.0
6.5
3.2
11.1
1.0
1.0
0.0
0.0
Source: MOFSL, Company
Source: MOFSL, Company
1 November 2021
6
 Motilal Oswal Financial Services
Apollo Tyres
Story in charts
Exhibit 10: Revenue and growth trend
Consol. revenue (INR b)
18.2
12.6
164
-6.8
148
FY18
175
FY19
FY20
173
FY21
207
FY22E
234
FY23E
17
FY18
20
FY19
19
FY20
27
FY21
27
FY22E
35
FY23E
5.7
Growth YoY %
19.6
13.0
11.1
11.2
11.9
Exhibit 11: EBITDA and EBITDA margin trend
Consol. EBITDA (INR b)
15.5
13.1
EBITDA margin %
15.0
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 12: Market share: APTY leads in TBR and is close
second in PCR
FY17
30.5
25
15
17.5
21
21
19 17.5
FY20
FY21
29
Exhibit 13: Europe operations – revenue and growth trend
Revenue (EUR m)
Growth YoY %
16%
7%
3%
3%
-5%
472
506
FY19
523
FY20
497
FY21
538
FY22E
624
FY23E
8%
PCR
TBR
T&B
Tractor (Rear)
Source: Company, MOFSL
FY18
Source: Company, MOFSL
Exhibit 14: Europe operations – EBITDA margin trend
EBITDA (EUR m)
EBITDA margin %
17.5
17.3
Exhibit 15: Europe operations – Hungary plant’s contribution
Share of Hungary plant to EU revenue %
64%
45%
52%
56%
12.4
7.9
8.5
15%
40
FY19
44
FY20
62
FY21
93
FY22E
109
FY23E
FY18
FY19
FY20
29%
FY21
FY22E
FY23E
Source: Company, MOFSL
Source: Company, MOFSL
1 November 2021
7
 Motilal Oswal Financial Services
Apollo Tyres
Exhibit 16: Capex intensity to remain low for Europe
operations
Capex (EUR m)
51%
37%
28%
30
6%
118
FY15
FY16
232
FY17
175
FY18
73
FY19
FY20
FY21 FY22E FY23E
14%
37
18
7%
4%
25
5%
25
4%
% of sales
Exhibit 17: Expect EU operations to turn profitable by FY22
PAT (EUR m)
37
24
9
2
-9
FY18
FY19
FY20
-52
FY21
FY22E
FY23E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 18: PAT and PAT growth trend
Consol. PAT (INR b)
38.1
15.0
-42.8
8
FY19
5
FY20
7
FY21
8
FY22E
13
FY23E
Growth YoY %
58.0
24.8
Exhibit 19: Trend in return profile
RoE (%)
8.5
8.4
6.2
4.8
6.3
6.4
4.5
5.4
6.3
7.0
8.6
RoCE (%)
10.3
-34.2
7
FY18
FY18
FY19
FY20
FY21
FY22E
FY23E
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 20: FCF to turn positive in FY21 after elongated capex
FCF (INR b)
1.3
1.2
1.0
Cash conversion (x)
1.4
1.1
Exhibit 21: Net debt to reduce to 0.2x equity in FY23E
Net Debt (x)
3.1
2.1
2.4
1.6
1.2
0.3
0.5
0.6
0.4
0.3
0.2
FY22E
FY23E
0.6
Net Debt/EBITDA (x)
0.7
(13)
(12)
(3)
13
15
16
FY18
FY19
FY20
FY21
FY22E
FY23E
FY18
FY19
FY20
FY21
Source: MOFSL, Company
Source: MOFSL, Company
1 November 2021
8
 Motilal Oswal Financial Services
Apollo Tyres
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
Employees Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
EBIT Margin (%)
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Minority Interest
Adjusted PAT
Change (%)
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY18
1,48,429
12.6
83,955
21,566
26,371
1,31,893
88.9
16,536
11.1
5,926
10,610
7.1
1,629
1,142
10,123
0
10,123
2,884
28.5
0
7,239
-34.2
FY19
1,75,488
18.2
1,01,383
24,296
30,224
1,55,902
88.8
19,586
11.2
8,127
11,460
6.5
1,811
1,231
10,880
2,000
8,880
2,083
23.5
0
8,328
15.0
FY20
1,63,502
-6.8
90,756
24,822
28,537
1,44,115
88.1
19,387
11.9
11,381
8,006
4.9
2,808
237
5,434
0
5,434
670
12.3
0
4,764
-42.8
FY21
1,72,820
5.7
93,945
25,134
26,917
1,45,995
84.5
26,825
15.5
13,150
13,675
7.9
4,430
1,294
10,539
4,927
5,612
2,110
37.6
0
6,576
38.1
FY22E
2,06,674
19.6
1,20,692
26,029
32,844
1,79,564
86.9
27,110
13.1
13,859
13,251
6.4
4,028
1,297
10,520
54
10,466
2,298
22.0
0
8,210
24.8
(INR m)
FY23E
2,33,577
13.0
1,33,592
27,663
37,255
1,98,510
85.0
35,068
15.0
15,091
19,977
8.6
3,700
1,117
17,394
0
17,394
4,425
25.4
0
12,969
58.0
FY18
572
97,195
97,767
53,321
7,433
1,58,521
1,72,196
70,226
1,01,970
2,061
23,041
13,425
60,080
29,454
14,350
5,992
10,285
42,056
24,471
13,439
4,146
18,024
1,58,521
FY19
572
99,826
1,00,398
51,801
7,707
1,59,906
1,93,899
78,352
1,15,547
1,993
15,393
60
68,516
34,841
13,144
5,627
14,905
41,603
20,665
16,002
4,936
26,913
1,59,906
FY20
572
98,728
99,300
68,383
7,032
1,74,715
2,42,083
89,734
1,52,350
2,134
16,420
194
60,957
32,069
9,399
7,496
11,993
57,340
23,090
29,115
5,134
3,617
1,74,715
FY21
635
1,13,796
1,14,431
65,843
7,020
1,87,294
2,64,875
1,02,883
1,61,992
2,204
11,065
1,096
82,088
33,185
13,808
21,458
13,637
71,151
28,067
38,644
4,440
10,937
1,87,294
FY22E
635
1,19,676
1,20,311
61,398
7,020
1,88,729
2,83,838
1,16,742
1,67,097
2,204
12,324
195
97,861
39,636
14,156
27,762
16,308
90,952
33,974
51,668
5,310
6,909
1,88,729
FY23E
635
1,30,070
1,30,705
54,365
7,020
1,92,090
3,02,331
1,31,833
1,70,498
2,204
11,098
195
1,10,887
44,796
15,998
31,661
18,431
1,02,792
38,396
58,394
6,001
8,095
1,92,090
1 November 2021
9
 Motilal Oswal Financial Services
Apollo Tyres
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Net Debt/Equity
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY18
12.7
170.9
2.7
25.4
17.4
1.3
1.2
10.5
1.2
-23.6
8.5
6.3
7.6
0.9
0.9
72
35
60
0.3
FY19
14.6
175.5
3.0
30.4
15.2
1.3
1.0
8.8
1.4
-21.0
8.4
6.4
6.9
0.9
1.1
72
27
43
0.5
FY20
8.3
173.6
6.2
90.5
26.5
1.3
1.1
9.7
2.8
-5.0
4.8
4.5
4.8
0.7
0.9
72
21
52
0.6
FY21
11.5
200.0
3.5
57.2
19.2
1.1
1.0
6.4
1.6
22.6
6.2
5.4
5.6
0.7
0.9
70
29
59
0.4
FY22E
14.4
210.3
4.0
28.0
15.4
1.0
0.8
5.9
1.8
26.1
7.0
6.3
6.8
0.7
1.1
70
25
60
0.3
FY23E
22.7
228.5
4.5
19.8
9.7
1.0
0.6
4.2
2.0
28.1
10.3
8.6
10.0
0.8
1.2
70
25
60
0.2
(INR m)
FY23E
17,394
15,091
2,583
-4,425
2,714
33,357
0
33,357
-17,267
16,090
0
1,117
-16,149
0
-7,033
-3,700
-2,574
0
-13,308
3,900
15,275
19,175
FY18
10,123
5,926
1,629
-2,465
3,154
18,367
-1,170
17,197
-30,672
-13,475
-9,315
1,358
-38,628
14,761
11,608
-1,323
-1,838
2,838
26,046
4,615
191
4,806
FY19
8,881
8,127
1,811
-2,199
-5,433
11,187
-476
10,711
-22,740
-12,028
11,366
1,414
-9,959
0
3,265
-1,819
-2,069
-314
-936
-184
4,806
4,622
FY20
5,434
11,381
2,808
-925
7,996
26,695
-1,522
25,174
-28,055
-2,881
-134
230
-27,959
0
13,863
-2,232
-4,310
-2,810
4,510
1,725
4,622
6,347
FY21
5,612
13,150
4,430
-2,035
4,616
25,772
-1,303
24,469
-11,563
12,906
-12,547
667
-23,443
10,800
-3,222
-3,407
0
-2,626
1,545
2,571
6,347
8,918
FY22E
10,520
13,859
2,731
-2,298
10,331
35,143
0
35,143
-20,222
14,921
901
1,297
-18,025
0
-4,444
-4,028
-2,288
0
-10,761
6,358
8,918
15,275
1 November 2021
10
 Motilal Oswal Financial Services
Apollo Tyres
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
1 November 2021
11
 Motilal Oswal Financial Services
Apollo Tyres
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
1 November 2021
12