Apollo Tyres hits 52-week high on heavy volumes, surges 66% in 3 months

Shares of Apollo Tyres advanced 7 per cent to hit a fresh 52-week high of Rs 194.70 on the National Stock Exchange (NSE) on Friday on the back of heavy volumes. The stock surpassed its previous high of Rs 191.80, touched on December 3, 2020.

The trading volumes on the counter nearly doubled with a combined around 19 million equity shares changing hands on the NSE and BSE. In the past three months, Apollo Tyres' stock price has zoomed 67 per cent, as compared to 19 per cent rise in the Nifty50 index.

Analysts expect revenue growth for Apollo Tyres to accelerate, as the truck OEM segment is on the path to recovery and the replacement segment remains robust.

As per the company's management, intensity of capex cycle is over, and the focus is on sweating the assets and running plants at 90-95 per cent utilization. In the next 2-3 years, the company will focus to get return ratios back into the double digit.

There has been pent-up demand in Q1 and the beginning of Q2 and pent-up demand is now in the T&B segment. It expects demand to sustain in the T&B segment, led by freight rates, which have gone up, economic activity picked up, mining sector picked up and construction sector is backed by government investments. Passenger car demand is sustainable, led by import restrictions, it said.

From June, all categories have recovered. H1 has seen 20 per cent revenue contraction YoY for Apollo Tyres and target for the whole year is to have single digit positive growth, led by replacement buoyancy and OEM recovery. If the current demand momentum sustains then, Apollo Tyres is expected to report low single-digit revenue growth in FY21, analysts at Elara Capital said in result update.

Meanwhile, on December 5, Apollo Tyres informed the exchanges that the Committee of Directors - Private Placement has allotted 63 million equity shares of the company. The preferential allotment was done on a private placement basis, at a conversion price of Rs 171.29 each, to Emerald Sage Investment, the company said.

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