homemarket Newsstocks NewsDeleveraging focus prompts UBS to raise price target on Apollo Tyres; stock at 52 week high

Deleveraging focus prompts UBS to raise price target on Apollo Tyres; stock at 52-week high

UBS' updated price target implies a potential upside of 21 percent from Friday's closing levels.

Profile image

By CNBCTV18.com Nov 28, 2022 12:48:57 PM IST (Published)

Listen to the Article(6 Minutes)
2 Min Read

Share Market Live

View All

UBS Securities expects Apollo Tyres' Return on Equity (RoE) to double and net debt to halve by the financial year 2025 as the company continues to put deleveraging as the key focus.
Citing these factors, the brokerage maintained its buy rating while upping its price target on the stock to Rs 355 from Rs 295 earlier.
UBS' updated price target implies a potential upside of 21 percent from Friday's closing levels.

As a result of this upgrade, shares of Apollo Tyres gained as much as 6 percent on Monday to hit a new 52-week high.

The brokerage expects that easing commodity prices will support the tyre maker’s gross margins.

UBS expects Apollo Tyres' EBITDA margin to grow to 13.5 percent in the next financial year and 14 percent in the financial year 2025. For the September quarter, the company's EBITDA margin stood at 10.3 percent.

Apollo Tyres' Return on Equity (RoE) is also likely to double to 13 percent by the financial year 2025, compared to 6 percent in the previous financial year. It also expects net debt to fall to Rs 2,600 crore within the next two financial years from Rs 5,500 crore in the last financial year.

At 12 times price-to-earnings for the financial year 2024, UBS finds Apollo Tyres' valuations to be attractive as most of its peers are trading between 17 times to 26 times.
For the September quarter, the company's net profit increased 12 percent from last year to beat analyst estimates, led by lower costs and higher revenue.

Shares of Apollo Tyres are trading 5.78 percent higher at Rs 310.15.

Most Read

Share Market Live

View All
Top GainersTop Losers
CurrencyCommodities
CurrencyPriceChange%Change