Buy Apollo Tyres, target price Rs 300: Motilal Oswal

Motilal Oswal has buy call on Apollo Tyres Ltd. with a target price of Rs 300. The current market price of Apollo Tyres Ltd. is Rs 226.7. Time period given by analyst is one year when Apollo Tyres Ltd. price can reach defined target.
Apollo Tyres Ltd., incorporated in the year 1972, is a Mid Cap company (having a market cap of Rs 14308.82 Crore) operating in Tyres sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 5087.57 Crore, down -2.49 % from last quarter Total Income of Rs 5217.42 Crore and up 41.02 % from last year same quarter Total Income of Rs 3607.74 Crore. Company reported net profit after tax of Rs 287.25 Crore in latest quarter.

Investment Rationale
APTY is geared for the next leg of growth, with sufficient capacity to cater to domestic/European demand. It would benefit from: a) ramp-up of new capacities, b) reduction in capex intensity, c) EU operation turnaround, and d) debt reduction. As compared to its peers, APTY offers the best blend of earnings growth and cheap valuations. The stock trades at 11.9x/9.7x FY22E/FY23E consolidated EPS. The brokerage initiate coverage on the stock with a Buy rating and a TP of INR300 (12x Sep-23 consolidated EPS v/s 16x/12x five/10 year average P/E).


Promoter/FII Holdings
Promoters held 40.90 per cent stake in the company as of March 31, 2020, while FIIs held 22.89 per cent, DIIs 18.81 and public and others 17.4 per cent.