BackApollo Tyres aims to double revenue to $5 billion by 2026
Apollo Tyres reported a 270.5% year-on-year increase in consolidated net profit to Rs289 crore for the fourth quarter of FY21, as vehicle production revived
PremiumNEW DELHI: Apollo Tyres Ltd, the country’s largest tyre manufacturer, plans to double its revenue to $5 billion in the next five years by 2026 and improve operating profit margin to more than 15% on the back of growth in revenues and cost cutting strategies adopted by the company.
In a presentation of investors, the company's management also said it is targeting generating a pre-tax return on capital employed (ROCE) of 12-15% and maintain debt to EBITDA ratio of two times of the operating profit.
“In Europe, ATL (Apollo Tyres) aims to grow faster than the industry on the back of building upon TBR introduction (2% market share), entry into new geographies within Europe, targeting all-season tyres and on-boarding German OEMs in PCR. Additionally, product mix improvement remains a focus area, to be achieved via increasing share of ultra-high performance i.e., UHP tyres in sales mix from present 36% to 40%," said analysts of ICICI Securities in a note.
They said the company has begun seeding the large US market and would be serving it via facilities in India and Hungary. Share of exports in India revenues is set to increase to 20% compared to the present 10% in the next five years. Apollo would soon be launching EV tyres (value add in terms of low rolling resistance and less noise incidence) under Vredestein brand for Europe and US (to be manufactured in India).
Apollo Tyres reported a 270.5% year-on-year increase in consolidated net profit to Rs289 crore for the fourth quarter of FY21, as vehicle production returned to pre-covid level in India and foreign markets.
Revenue from operations during the quarter improved 39% year-on-year to Rs5,026 crore. Operating profit or earnings before interest, tax, depreciation and amortisation (Ebitda), also jumped 69% y-o-y to Rs815 crore due to an overall improvement in sales and cost cutting measures taken by the company.
“On the margin front, ATL said that Europe margins achieved in H2FY21 (15%) are sustainable, with Dutch plant specialisation holding the key to future performance. The company seeks to reduce raw material consumption by 5-7% on like-to-like basis over the next five years, with production ramp up set to deliver operating leverage benefits across geographies, going forward," added analysts of ICICI Securities.
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