Apollo tyre buy at 450 looks good. Aim 600
We reiterate our BUY on Apollo Tyres. ATL
Its continuous focus on premiumisation
Its priority to operating performance in place of plain-vanilla volume growth
Judicious capex plans and
Disciplined capital allocation plan. ATL continues to sustain its operating profitability via improving product mix focusing, given it has been reporting EBITDA margins above 18% for last two quarters. Given that the ATL is prioritising operating performance over volume growth we expect its bottom-line performance would beat its topline performance in medium term, subjected to sustenance of operating excellence. So far, tyre players have been demonstrating a pricing discipline in the domestic market, however recently tyre players have undertaken a slight price correction in the TBR segment. Following the industry trends, ATL has also rationalised prices by 1.5% in 2 SKUs in TBR segment.
Its continuous focus on premiumisation
Its priority to operating performance in place of plain-vanilla volume growth
Judicious capex plans and
Disciplined capital allocation plan. ATL continues to sustain its operating profitability via improving product mix focusing, given it has been reporting EBITDA margins above 18% for last two quarters. Given that the ATL is prioritising operating performance over volume growth we expect its bottom-line performance would beat its topline performance in medium term, subjected to sustenance of operating excellence. So far, tyre players have been demonstrating a pricing discipline in the domestic market, however recently tyre players have undertaken a slight price correction in the TBR segment. Following the industry trends, ATL has also rationalised prices by 1.5% in 2 SKUs in TBR segment.
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