CMP Rs102, Target 120, Upside 17.6%
- Cooper Tires has called off the deal with Apollo Tyres (APTY) and has filed a suit against APTY for damages. Currently we have not factored in any break-up charges.
- Investors, however, will continue to be weary of future such large acquisitions which APTY might pursue leading to continued discount to its historical valuations.
- With rubber prices cooling off and replacement demand picking up, tyre stocks have seen a sharp rally in the recent past. In spite of applying a discount to its historical valuations, we believe APTY has some catching up to do. For APTY stability in European economies is an additional positive.
- We upgrade our recommendation from Market Performer to BUY with a revised price target of Rs120.
BSE 241.80 [3.20] ([1.31]%)
NSE 241.95 [3.60] ([1.47]%)
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