Apollo Tyres FY 08 performance - by Narasimhan
Apollo tyres have recently announced the FY 08 results. The key financial indicators are tabulated below: | Rs Millions | Mar ' 08 | Dec ' 07 | Sep ' 07 | Jun ' 07 | Mar ' 07 |
| Sales | 10,013 | 9,741 | 8,443 | 10,055 | 10,431 |
| Operating profit | 1,242 | 1,309 | 1,081 | 1,004 | 1,004 |
| Interest | 104 | 130 | 140 | 147 | 133 |
| Gross profit | 1,138 | 1,183 | 976 | 915 | 897 |
| Depreciation | 244 | 227 | 201 | 207 | 190 |
| Net profit / loss | 593 | 622 | 511 | 468 | 427 |
| Equity capital | 489 | 476 | 464 | 464 | 464 |
| EPS (Rs) | 1.21 | 1.31 | 1.1 | 1.01 | 0.92 |
| OPM (%) | 12.40% | 13.44% | 12.80% | 9.99% | 9.63% |
| GPM (%) | 11.37% | 12.15% | 11.56% | 9.10% | 8.60% |
| NPM (%) | 5.92% | 6.38% | 6.05% | 4.65% | 4.10% |
The company has reported an annual sale of Rs. 38.25 Billion and a net profit of Rs. 2.19 Billion. The quarterly performance shows a good growth over the corresponding previous year’s figures. However there is a decline in the performance when the previous quarters results are compared with. The sales have also declined marginally. Increasing erosion of earning as the raw material price increase have gone without compensating rises in the output prices is a major issue that remains to be resolved. It is not easy as the market is overcrowded with supplies and the company has to compete with imports to remain in the fray.
What the investors can do?
The company is setting up additional capacities in Baroda. It has also plans to set up a unit in new unit at a cost of 200 Million Euros for passenger car segment at Budapest, Hungary. The South African venture is likely to top growth at more than 10%. . In the car radial the company is dominating with over 30% share. It will defend this share by suitable capacity increases and cost cutting measures that will help them stay in profits. Although the Q4 results have dipped as compared to Q3 the company is likely to expand and post better results. Investors may hold this share and wait for the difficult commodity price spikes to pass away.
The charts reveal an interesting pattern. The long term investors can afford to wait as the negative pattern in stock takes it to lower levels. The sort term investor can enter on either side of the trade and make money as the company has strong results to back and stock market range trading and steady decline in values will continue in the ensuing months.