Apollo Tyres skids despite good results

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On Wednesday, May 10, Apollo Tyres shares fell by more than 4 per cent despite the company’s results for the fourth quarter of FY23 being better than the market estimates, due to two main reasons. The first is that the market was already expecting good results and that is the reason why the stock has been strong consistently for 5 days before the results and in 5 days the stock registered a gain of 10%. Not only this, the stock has increased by about 25% in 6 months and about 85% in 1 year. The second reason is that the profit of the company has increased almost 4 times year on year but this increase in profit has been seen due to reduction in tax and interest expense.

Q-o-Q tax payment has come down from Rs.132 crore to Rs.99 crore and interest expense has come down from about Rs.142 crore to Rs.139 crore quarter-on-quarter. In terms of results, the company’s profit in Q4 has increased 3.8 times from Rs 113.4 crore to Rs 427.3 crore. Operating margin has increased from 11.2 per cent to 16 per cent. Its income has increased by only 12 percent from Rs 5,578 crore to Rs 6,247 crore.

By the end of the session, the share improved a bit and it closed Rs 368.60 with a fall of 3.41%. Stock is trading close to its 52-week high. The 52-week high of Apollo Tyres is 383.30 and its 52-week low is 167.10. The Stock’s P/E is 29.62. Although the stock has gained a lot in recent times, its P/E is not that high as other tyre companies like CEAT, MRF has higher P/E. Apollo Tyres is based in Gurgaon and was established in 1972. It has a market capitalization of above Rs 23,000 crore.