10 APOLLOTYRE share price target reports by brokerages below. See what is analyst's view on APOLLOTYRE share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Demand to remain muted in the near term; Return ratios to remain under pressure; Retain Hold: ATL’s demand pressures are expected to sustain in the near term, given weak CV OEM demand and drop in the European tyre industry. With muted demand in intensive capex cycle (due to Hungary and new AP plant), we expect ATL’s ROCE to remain at 7-8%, which would prevent re-rating. Moreover, current valuation of 12.3x its FY2021 earnings is at the higher end of the long-term historical multiples, thus leaving limited scope of upside from current levels. We have retained our earnings estimates for ATL. We maintain our Hold rating on the stock with a revised PT of Rs. 185.
Looking ahead, we expect ATL’s performance to improve owing to likely pick-up in OEM sales and production ramp-up at Hungary plant. However, in view of near-term OEM slowdown and sluggish economic condition, we lower our revenue estimates by 6%/4% and EBIDTA estimate by 5%/+1% for FY20E/FY21E. Factoring in higher depreciation for higher capex and interest expenses for increasing debt level, we cut our EPS estimates by 20%/4% for FY20E/ FY21E. We introduce our FY22E estimates and roll over our valuation to FY22E (at lower target P/E multiple of 10.5x from earlier 12x). In view of positive outlook for replacement industry in India operations and attractive valuation at 8.8x FY22E EPS, we reiterate our BUY recommendation on the stock with a revised Target Price of Rs215 (from Rs185 earlier), valuing it at 10.5xFY22E EPS.
We expect the company to be weighed down by weak macro trends and recovery is expected to take longer. The stock is currently trading at 10.8x FY20E P/E multiple. We roll forward to FY21E and value Apollo Tyres Limited at ~9x FY21E EPS considering limited visibility on a turnaround. We downgrade the rating to REDUCE with a revised target price of Rs. 151.
Valuation. We expect revenue to clock a 12% CAGR over FY19-21, and earnings 13% to 11.23bn, leading to an EPS of 19.6. We maintain our Buy rating, at a price of 255 (13x FY21e EPS), earlier `258. Risks: 1) Lower volume growth in India and Europe. 2) Higher RM costs.
We expect 9/10% Revenue/EBITDA CAGR over FY19-21E, however net profit is likely to have flat CAGR, suppressed by higher depreciation and interest cost due to significant capacity addition. We cut our EPS estimates by13/16% and value the India business at 150/share (15x FY21E EPS) and Europe at 40/share (12x FY21E EPS). We recommend BUY rating with TP of 190.
Retain estimates; maintain Buy with unchanged PT of Rs. 230: The CVD is unlikely to meaningfully drive demand for ATL. Hence, we retain our earnings estimates for FY2020 and FY2021. Nevertheless, ATL’s earnings are likely to grow in double digits during FY2020-2021 due to healthy growth in the domestic replacement market and a ramp up in European operations. We expect ATL to sustain margins, led by a strong pricing power and dominant market share in the passenger vehicle and commercial vehicle (CV) segments. Further, a low debt:equity ratio, peaking of capex cycle and a reasonable valuation of 11x FY21 earnings, give us comfort for investment. We maintain our Buy rating with an unchanged price target of (PT) of Rs. 230.
We remain cautious on the Europe business, given market uncertainty, especially over pricing. The market share gains in India business, especially TBR, would continue. In our view, strong demand commentary in the replacement segment at the start of Q1FY20 is a positive, given the weak OEM demand scenario. We reiterate Buy with a TP of INR 232 on 11x FY21E P/E.
Looking ahead, we expect ATL’s performance to improve owing to steady ramp-up in Hungarian operations and market share gain across both the geographies. However, factoring in the near- term slowdown and pricing pressure, we lower our revenue and EBIDTA estimates by 4%/5% and 7%/7% for FY20E/FY21E, respectively. Factoring in higher depreciation for increased capex and interest expenses for increasing debt level, we cut our EPS estimates by 11%/10% for FY20E/ FY21E. Considering ATL’s outperformance in tyre industry and improving market share, we maintain its P/E valuation multiple at 12x. Expecting ATL’s earnings to clock 14% CAGR over FY19-FY21E and valuing it at 12xFY21E EPS, we maintain our BUY recommendation on the stock with a revised Target Price of Rs225 (from Rs250 earlier).
Valuations: Estimates cut on weak Q4; Retain Buy with a revised PT of Rs 230; recent 15% correction provides a good entry point: Given the weak operating performance of the European business, we have cut our FY2020 estimates by 14%. We have introduced FY2021 estimates in this note and rollover our target multiple on FY2021 earnings. We retain our Buy rating on the stock with a revised price target (PT) of Rs. 230 (from Rs. 250 earlier). The stock has corrected by about 15% in the past two months which provides a good entry point for investors.
Apollo Tyres’ (APTY) Q4FY19 Consolidated APAT at ` 1.84bn (-26% YoY) was below estimates led by lower than expected margin from overseas operations (6%; -330bps YoY), while the India business operations were inline. EBIT turned negative (` 465mn) for European business led by muted replacement demand. The Indian business reported 8% revenue growth with sequential improvement in margin amid challenging environment in OEMs and replacement markets. We expect the margins to improve hereon owing to economies of scale, benign commodity prices and improving mix in European operations (higher share of production from Hungary plant). The management is confident in achieving double digit growth for FY20 and expecting a demand recovery in both domestic as well as European operations. We expect 12/16% Revenue/EBITDA CAGR over FY19-21E, however net profit to register at 8% CAGR, suppressed by higher depreciation and interest cost due to significant capacity addition. We value the India business at ` 203/share (15x FY21E EPS) and Europe at Rs 39/share (12x FY21E EPS). We recommend BUY rating with TP of Rs 242.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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