Apollo Tyres Ltd's Q4FY18 consolidated net profit rises 10% yoy to Rs250.11cr : In-line with Estimates

India Infoline Research Team | May 10, 2018 18:51 IST

The company’s consolidated revenue stood at Rs4,031.33cr, up 21.22% yoy but down 0.46% qoq.

Apollo Tyres Ltd Q4FY18

Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 4,031.33 21.2
EBITDA 515.20 39.3
EBITDA Margin (%) 12.8 166
Net Profit (adjusted) 250.11 9.6
***EBITDA margin change is bps
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Reco. Price

287.7

Last updated on

07-May-2018



Apollo Tyres Limited (ATL) reported in-line numbers for Q4FY18. Consolidated revenue was up 21% yoy at Rs4,031cr, in-line with consensus estimate. EBITDA was up 39% yoy at Rs515cr, while EBITDA margin expanded 166bps yoy to 12.8%. ATL marginally exceeded consensus EBITDA estimate. EBITDA growth was led by lower (as % of sales) operating and raw material expenses. Consolidated PAT was up 10% yoy at Rs250cr, marginally ahead of street estimate. Against an EBITDA growth of 39% yoy, ATL could manage PAT growth of only 10% yoy, due to high interest and tax expenses and lower other income.


Other Highlights
  • Within segments, growth in Europe was encouraging at 22% yoy, while growth for the largest segment APMEA (Asia-Pacific, Middle-East and Africa) was up 7% yoy. The “Others” segment, which includes mainly America, was up 60% yoy.
  • Standalone revenue was up 19% yoy. EBITDA was up 46% yoy at Rs403cr, led by lower operating and raw material costs (as % of sales). EBITDA margin expanded 257bps yoy to 14.2%, the highest level in past five quarters. Standalone PAT rose 275 yoy to Rs224cr. 
  • The Board of Directors announced dividend of Rs3/- per share.
  • The company plans to raise Rs1,500cr through private placement of Non-convertible debentures, subject to shareholder approval.
  • Similar to its peer MRF, ATL too has sounded caution w.r.t. rising input prices, especially those of crude. Despite a positive demand environment, competitive pressure could prevent companies from taking considerable price hike to offset input cost escalation.
  • Capacity expansions in Europe and India provide triggers for top-line growth.


Highlights from post result conference call
  • Debt level as on March 31, 2018 was Consolidated: Gross debt = Rs4,650cr vs. Rs4,350cr in Q3FY18, Net debt = Rs2,720cr; Standalone: Gross debt = Rs2,500cr vs. Rs2,300cr in Q3FY18, Net debt = Rs950cr
  • Volume growth in Q4FY18: India = 17% yoy, led by TBR segment. Full year volume growth = 13-14%. Europe = 13% yoy (PVs).
  • European operations summary in Q4FY18: Sales = Rs2,000cr, EBITDA margin = 7.2%, Hungary greenfield expansion continues to be on track. Capacity currently 6,500 car tyres/day; to reach 13,000 tyres/day by FY19 end.
  • Truck tyre replacement growth was in mid-teens on yoy basis and mid-single digits on qoq basis. As per the management, such growth was seen after a long time and is a result of heightened economic activity.
  • The EU has imposed anti-dumping duty on Chinese tyres, which augurs well for ATL, which has significant European operations.
  • Capex in FY18 = Rs1,700-1,800cr; guidance for FY19 = Rs1,000cr
  • Strong outlook for truck tyres for FY19; double digit (lower teens) growth expected.
  • Company has no plans for backward integration w.r.t. carbon black sourcing. Management expects carbon black supply to remain tight.
  • For the Hungary plant, average Q4FY18 output was 5,000 tyres per day, exit output was 6,000 tyres per day. Expected exit rate by end FY19 is 12,000 tyres per day.
  • Truck volumes contribute 63% to total India volumes of which, 35% are TBR, rest are TBB. TBB growth was in single digits in Q4FY18. TBR production was 10,000tpd, capacity utilization is higher than 90%. Expected to reach TBR optimum capacity in Chennai of 12,000tpd by Q2FY19.
  • Raw material prices during the quarter were - Natural Rubber: Rs130/kg, Carbon black: Rs70/kg, Synthetic rubber: Rs130/kg.


Technical View:

Apollo Tyres Ltd is currently trading at Rs. 283.45, down by 3.6 points or 1.25% from its previous closing of Rs. 287.05 on the BSE.
The scrip opened at Rs. 288.95 and has touched a high and low of Rs. 291.95 and Rs. 282.10 respectively. So far 30,91,124 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.



***Note: This is a NSE Chart

 

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