Apollo Tyres would give you gains over the next 1.5 years: Rajesh Jain

Rajesh Jain, Market Strategist in an interview with ET Now talks about Apollo Tyres.

Apollo Tyres, what is the price target that you are looking at on the stock?

The tyre space has had a bit of a disappointment recently. A quarter ago we were expecting good traction in margins given the fact that rubber prices has started easing of but that was something that flattered to deceive and we saw the entire auto tyre boom fizzle out both in the markets as well as on a business bases as evidenced by the quarterly numbers.

But the companies has finally taken the price increase and the news of a first 5% jump there we are all aware of the tremendous volume upside thanks to the boom in the four wheeler and the two wheeler sales and in sync with the growing automobile volumes Apollo Tyres is well placed because it has early on indulge in capacity expansion in India and abroad through acquisitions as well as fresh capacity creation.

So in Apollo Tyres we see triple drivers demand induce volume growth, margin expansion due to price increases and also the likelihood of easing of input prices further expanding margins. So in this context when you take it in the backdrop of capacity creation capacities particularly in auto ancillaries have been one of the reasons for a bottle neck in automobile companies not really being able to exploit sales further despite the great October numbers. So on this bases I expect Apollo Tyres to give you anywhere from a 30% to 50% gain over the next 1 to 1.5 year and my target would be about 110.