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Reliance Securities Report
Apollo Tyres Ltd. recorded a strong operating performance in Q2 FY23 with Ebitda margin coming at 12% (down 61 basis points YoY and up 35 basis points QoQ), versus our estimate of 11.6% due to regular price hike, tight cost control and better operating leverage.
Consolidated revenue increased by 17% YoY (flat QoQ) to Rs 59.6 billion, broadly in line with our estimate of Rs 60 billion, due to strong performance of Europe business coupled with healthy India operations.
Apollo Tyres’ standalone revenue grew by 17% YoY (down 4% QoQ) to Rs 42.5 billion. Consolidated Ebitda stood at Rs 7.1 billion (up 12% YoY and up 3% QoQ), 2% above our estimate of Rs 6.9 billion due to operating leverage despite higher commodity cost.
Raw material/sales grew by 257 bps YoY and 81 bps QoQ to 61.1%. Adjusted profit after tax stood at Rs 1.94 billion (up 10% YoY and up 2% QoQ), 1.3% below our estimate of Rs 1.97 billion, due to higher interest expenses on higher debt level.
Operating leverage, regular price hikes, falling commodity cost and geographical mix would aid margins.
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