Apollo Tyres shares gained nearly 3% following positive outlooks from major brokerages. JPMorgan reiterated its “Overweight” rating with a target price of ₹555, suggesting a 21.2% upside, while UBS maintained a “Buy” rating with a higher target price of ₹605, indicating a potential 32% upside from the current market price of ₹458.
Key Financial Highlights for Q2 FY25:
- Revenue from Operations: Increased by 2.5% YoY to ₹6,437 crore, up from ₹6,279.57 crore in Q2 FY24. Sequentially, revenue grew by 1.6% from ₹6,334.85 crore in Q1 FY25.
- Net Profit: Declined by 37.3% YoY to ₹297.45 crore, down from ₹474.25 crore in Q2 FY24, with a sequential dip of 1.5% from ₹302 crore in Q1 FY25.
Analyst Insights:
- JPMorgan: Notes that the Q2 results were weak as anticipated, and guidance on H2 pricing will be crucial. The increase in net debt is attributed to seasonal working capital needs.
- UBS: Highlights Apollo’s underperformance in India due to weak demand in the commercial vehicle (CV) segment. However, European operations have shown resilience, with 6% YoY revenue growth and 19% YoY growth in profit before interest and tax (PBIT).
Summary
Apollo Tyres’ moderate revenue growth and significant drop in profitability underscore challenges in managing operational costs amid sector pressures. While the company’s exposure to the CV market impacted its Q2 results, its strong European performance and favorable analyst outlook make Apollo Tyres a stock to watch as it navigates these headwinds in the coming quarters.