Update on Apollo Tyres Ltd by Motilal Oswal
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Above our estimate; revenue beat in India and EU business; higher other expenses in EU impacts operating margin
Consolidated performance in 4QFY22
* Revenue grew 11% YoY (-2.3% QoQ) to INR55.8b (est. INR53.4b).
* EBIDTA fell 23% YoY (16% QoQ) to INR6.3b (est. INR5.7b). EBIDTA margin declined by 500bp YoY (180bp QoQ) to 11.2% (est. 10.7%).
* Adjusted PAT declined by 61% YoY (+49% QoQ) to INR1.1b
Standalone performance
* Revenue grew 10% YoY and 5% QoQ to INR39.9b (est. INR38.6b).
* Gross margin improved by 38bp QoQ (down by 8pp YoY) to 30.6% (est. 30.2%).
* EBIDTA fell 33% YoY (+9% QoQ) to INR3.8b (est. INR3.2b). EBITDA margin stood at 9.4% (est. 8.7%), down 6pp YoY (+33bp QoQ).
* Adjusted PAT fell 76% YoY (+10% QoQ) to INR543m (est. INR371m).
Europe’s (derived) performance
* Revenue grew 14% YoY (-17% QoQ) to INR15.9b (est. INR14.8b).
* Gross margin expanded by 3.5pp QoQ (70bp YoY) to 62.7%.
* EBIDTA was flat YoY (-37% QoQ) at INR2.5b (inline). EBIDTA margin contracted by 500bp QoQ (250bp YoY) to 15.7% (est. 17%).
* Other expenses, as a percentage of sales, was inflated by 4pp QoQ to INR3.5b.
* Adjusted PAT declined by 66% QoQ (6% YoY) to INR592m (est. INR828m)
Valuation: The stock trades at 15.4x/9.7x FY23/FY24 EPS.
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