Apollo Tyres dips on weak Q4 earnings

Q4 profit down 10% year-on-year at Rs 141 crore due to drop in standalone volumes and significant increase in the depreciation expenses.

Apollo Tyres is trading lower 4.4% to Rs 90.15 on NSE after reporting 10% year-on-year (yoy) drop in consolidated net profit at Rs 141 crore for the fourth quarter ended March 31, 2013 due to drop in standalone volumes and significant increase in the depreciation expenses.

The company’s consolidated net sales declined by 6% yoy to Rs 3,038 crore largely on account of decline in standalone revenues.

Analyst on an average had expected net sales of Rs 3,203 crore and net profit of Rs 165 crore.

On the operating front, EBITDA margins declined 16bp quarter-on-quarter (qoq) and stood at 11.7%, which was slightly lower than our expectations of 12.2%, despite the 9.1% qoq decline in raw-material expenditure, says analyst at Angel Broking.

However, analyst retained “Accumulate” rating on the stock with a target price of Rs 104 and expects the operating margins to remain stable as the company will continue to benefit from the softening of commodity prices.

The stock opened at Rs 94 and hit a high of Rs 94.80 on NSE. A combined 2.2 million shares have changed hands on the counter till noon deals on NSE and BSE.