Apollo Tyres Witnesses 4% Surge in Shares Due to Strong Q2 Performance

08 Nov, 2023

Apollo Tyres Witnesses 4% Surge in Shares Due to Strong Q2 Performance

Shares of Apollo Tyres witnessed a substantial 4% surge in early trading on Wednesday following the release of the company's impressive financial results for the September quarter. The company reported a remarkable 2.5-fold increase in net profit, attributed to a drop in input costs and heightened demand.

In a significant turnaround from the previous session's losses, Apollo Tyres shares opened higher at ₹391, marking a 1.5% increase compared to the previous closing price of ₹385.30 on the Bombay Stock Exchange (BSE). During early trading, the stock price of the tire industry leader surged by as much as 3.9%, reaching a high of 5.2% at ₹405.25, subsequently pushing the market capitalization up to ₹25,610 crore. The trading volume exhibited a surge in buying, with 3.2 lakh shares changing hands over the counter, contrasting with a two-week average of 1.35 lakh scrips.

Apollo Tyres reached its 52-week high of ₹440.95 on August 4, 2023, and its 52-week low of ₹270.05 on November 18, 2022. Over the last year, the stock has delivered an impressive 37% return, with a gain of over 23% in the calendar year 2023. In the last six months, the stock has risen by 7.5%, and in just one month, it has added 9%.

In a post-market release on Tuesday, Apollo Tyres disclosed its financial results for the September quarter, showcasing a substantial 164% increase in consolidated net profit to ₹474 crore in Q2 FY24, compared to ₹179 crore in the same period the previous year. Sequentially, the profit rose by 19.5% from ₹397 crore in the June quarter of FY24. This remarkable profit surge was primarily driven by the easing of crude oil and rubber prices, key raw materials for tire manufacturers.

The revenue from operations in the September quarter of FY24 increased by 5% to ₹6,280 crore, compared to ₹5,956 crore in the same period the previous year. Quarter-on-quarter, the revenue showed a marginal increase of 0.5% from ₹6,245 crore in Q1 FY24.

Region-wise, the Asia Pacific, Middle East, and Africa (APMEA) market contributed the highest revenue of ₹4,473 crore, followed by ₹1,819 crore from the European market.

At the operating level, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) witnessed a remarkable 62.9% increase, reaching ₹1,159.8 crore compared to ₹711.9 crore in the corresponding period of the previous fiscal year. The EBITDA margin stood at 18.5%, a significant improvement compared to the 12% in the same period the previous fiscal year.

During the quarter under review, total expenses declined marginally to ₹5,613 crore in Q2 FY24, compared to ₹5,691 crore in the previous year's quarter and ₹5,725 crore in Q1 FY24.

It's worth noting that Apollo Tyres' competitors, including MRF, CEAT, JK, and Goodyear India, also reported strong earnings in Q2 FY24, benefiting from reduced costs and increased demand.