Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Money / Apollo Tyres raises sales forecast to 15% this fiscal
BackBack

Apollo Tyres raises sales forecast to 15% this fiscal

Apollo Tyres raises sales forecast to 15% this fiscal

Premium


If the automobile industry is in the revival mode, then the tyre industry should naturally benefit. There has been a sharp improvement in Apollo Tyres Ltd’s performance since the June quarter.

In September, its stand-alone sales grew 24% to Rs1,220 crore compared with 10% growth last year. On a sequential basis, sales have grown 3%.

But the real kicker for Apollo Tyres is from the lower increase in raw material costs.

During the September quarter, the company’s total material costs rose by just 0.2% even as sales jumped by 24%. Rubber is a key input and lower prices versus a year ago seem to be the main reason for lower costs.

Other inputs such as carbon black and nylon tyre cord are linked to crude oil price trends. The company seems to have benefited on that front too.

Indian rubber prices were down by around 19% during the quarter from a year ago. Lower input costs cushioned the impact of higher employee costs, up by 37%, and other expenditure, which rose by 47%.

Ahmed Raza Khan / Mint

Rubber prices have been rising, though domestic prices are higher than international rates.

Apollo Tyres has said that its proportion of imports has been increasing to take advantage of this.

It will also be helped by the strong rupee as this lowers the cost of imports and other inputs whose prices are linked to international rates.

Despite higher depreciation and lower other income, offset by lower interest costs, the company’s net profit increased to Rs102 crore from Rs8 crore.

The company’s consolidated results, including from its South African and Dutch operations, show sales to be up 62% to Rs2,046 crore, while net profit increased from Rs15.1 crore to Rs129 crore. Apollo has raised its sales growth guidance for fiscal 2010 to 15% from 11%, while it maintains the net profit margin at 8%. Its stock price was up 5% after earnings and is up 15% from a month ago. At Rs55, its price-earnings multiple works out to around seven times, based on its guidance.

That seems low given the projected growth, but perhaps reflects the volatility in input costs that periodically affects the performance of tyre firms.

Write to us at marktomarket@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 20 Oct 2009, 10:03 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App