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.