Apollo Tyres Races Ahead On Q4 Data

The shares of Apollo Tyres spurted in noon trades, following its impressive fourth quarter results. The stock of the tyre major jumped to an intra-day high of Rs 123.50 before closing at Rs 118.50, higher by 2.64 per cent on the Bombay Stock Exchange (BSE), recovering from its intra-day low of Rs 115.25. Over 10.74 lakh shares changed hands on the counter.

In the afternoon, Apollo Tyre announced a massive 313 per cent rise in its net profit to Rs 18.51 crore compared with Rs 4.48 crore in the corresponding period last year. Net sales also increased by 16.2 per cent to Rs 473.15 crore, from Rs 407.17 crore in MQ 2001. In the last 25 sessions between 21 May to 25 June 2002, the scrip rose by 65.6 per cent to Rs 115.55, from Rs 69.75.

 

Analysts said the excellent fourth quarter results were purely following the pick-up in sales of commercial vehicles. The company derives most of the demand for its tyres from this segment, which contributes around 60-70 per cent to its turnover. Analysts said with the prospects brightening for commercial vehicles, Apollo Tyres is set to continue its growth in the years ahead.

Apollo Tyres is a strong player in the commercial vehicle tyre market. The realisation in this segment is more than the other tyre segments. Apollo Tyres has about 28 per cent share of the truck and bus tyre (commercial tyre) market.

For FY 2001-02, the company posted a 45 per cent rise in its net profit to Rs 36.8 crore (Rs 25.42 crore) on a 20.4 per cent rise in its total income to Rs 1,379.91 crore (Rs 1,146.11 crore). The board has also recommended a dividend of Rs 4.50 per share, amounting to Rs 16.34 crore for the year, on equity shares of Rs 10 each.

Recently, there were reports that the company is planning to acquire an existing tyre manufacturing unit in China. The due diligence is on and the deal is likely to be struck in three to four months. Around $20 million is likely to be invested in the Chinese company. As much as 90 per cent of the production would be sold in the Chinese market, while the rest would be exported. Currently, Apollo Tyres exports 10-15 per cent of its local production.

Earlier, Apollo Tyres decided to set up a Rs 110 crore modern plant to manufacture bus and truck radial tyres at Vadodara in Gujarat. The unit will be set up in technical collaboration with German tyre manufacturer, Continental AG. The unit would commence production from April 2004. The move aims at capturing the demand from multi-axle trucks, which have been witnessing rising sales in the commercial vehicles segment. The company has already started supplying radial tyres to the domestic market by way of imports from Continental AG of Germany.

Apollo Tyres is also the first company in the country to launch farm radial tyres. The farm radials incorporate high-tech design elements to give optimum combination of durability, better fuel consumption and longer life. The new range of farm radials are being manufactured in technological collaboration with Continental AG.