Apollo Tyres

1QFY2011Result Update | Tyre
July 30, 2010

Apollo Tyres BUY
CMP Rs64
Performance Highlights Target Price Rs79
Y/E March (Rs cr) 1QFY11 1QFY10 % chg (yoy) Angel Est. % Diff. Investment Period 12 Months
Net Sales 1,121 1,180 (5.0) 1,204 (6.9)
Stock Info
Operating Profit 117 194 (39.8) 130 (10.1)
Sector Tyre
OPM (%) 10.4 16.4 (603)bp 10.8 (37)bp
Market Cap (Rs cr) 3,221
Reported PAT 41 95 (57.1) 55 (26)
Source: Company, Angel Research Beta 0.9
52 Week High / Low 83/38
Apollo Tyres reported modest results for 1QFY2011, despite a sharp jump in
rubber prices and lockout at one of its plant. Standalone top-line registered a Avg. Daily Volume 1,254,170
decline of 5% yoy to Rs1,121cr (Rs1,180cr) in 1QFY2011. Tonnage sold for the Face Value (Rs) 1
quarter declined 20% qoq to 66,000MT on account of the lockout at its Permabra BSE Sensex 17,868
facility due to labor unrest. The Perambara plant shut down resulted in revenue
loss of around ~Rs300cr (15,000MT of production loss) during the quarter. On Nifty 5,368
the operating front, the company reported 603bp yoy contraction in operating Reuters Code APLO.BO
margin at 10.4% (16.4%). During 1QFY2010, net profit registered a substantial Bloomberg Code APTY@IN
decline of 57.1% to Rs40.6cr (Rs95cr).
Decent consolidated performance: The company however, reported healthy
performance at the consolidated level with both the subsidiaries reporting good Shareholding Pattern (%)
growth and also supported the company’ overall OPM. On a consolidated basis,
Promoters 39.8
the company recorded 11.4% yoy jump in top-line and marginal 1% increase in
net profit at Rs74cr. Consolidated tonnage volume for the quarter was 93,000MT. MF / Banks / Indian Fls 18.3
Operating margins at the consolidated level stood at 10.9% (12.6%) in FII / NRIs / OCBs 29.3
1QFY2011. Indian Public / Others 12.6
Outlook and Valuation: The tyre industry, during FY2010, benefited largely from
the substantial decline in raw material prices and spike in replacement demand.
Going ahead, we are positive on the sector as the OEM off-take is expected to
Abs. (%) 3m 1yr 3yr
improve on better overall auto industry volume growth. The recent run up in raw
material prices is however, a concern and expected to exert pressure on OPMs. Sensex 1.8 16.1 17.1
We expect the company to clock EPS of Rs7.9 in FY2011E and Rs9.8 in FY2012E. Apollo Tyres (8.1) 60.0 66.1
We believe that strong demand, prevailing high capacity utilisation levels and
higher investment requirements, would help the Indian tyre Industry to arrest the
sharp decline in margins despite the upward move in input costs (rubber and
carbon black). Thus, we maintain a Buy on Apollo Tyres, with a Target Price of
Rs79, at which level the stock would trade at 8x, 5x and 1.4x FY2012E EPS,
EV/EBITDA and P/BV, respectively.

Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 4,995 8,117 9,260 10,398
% chg 6.4 62.5 14.1 12.3
Net Profit 139.2 653.4 399.2 495.9
% chg (48.4) 369.5 (38.9) 24.2
OPM (%) 8.5 14.6 10.1 10.6
EPS (Rs) 2.8 13.0 7.9 9.8
P/E (x) 23.2 4.9 8.1 6.5 Vaishali Jajoo
P/BV (x) 2.4 1.6 1.3 1.1 022-4040 3800 Ext: 344
RoE (%) 16.2 24.0 24.1 16.9 vaishali.jajoo@angeltrade.com
RoCE (%) 13.2 29.2 13.9 14.9
Yaresh Kothari
EV/Sales (x) 0.8 0.6 0.5 0.5
022-4040 3800 Ext: 313
EV/EBITDA (x) 8.9 3.9 5.3 4.4 yareshb.kothari@angeltrade.com
Source: Company, Angel Research

Please refer to important disclosures at the end of this report 1

Apollo Tyres |1QFY2011 Result Update

Exhibit 1: Quarterly Performance (Standalone)
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 %chg
Net Sales 1,121 1,180 (5.0) 5,037 4,072 23.7
Consumption of RM 737 663 11.2 3,022 2,821 7.1
(% of Sales) 65.8 56.2 60.0 69.3
Staff Costs 77.4 62.6 23.6 289.5 207.6 39.5
(% of Sales) 6.9 5.3 5.7 5.1
Purchases of TG 27 30 (10.9) 152 116 30.6
(% of Sales) 2.4 2.5 3.0 2.9
Other Expenses 163 230 (29.2) 789 601 31.4
(% of Sales) 14.5 19.5 15.7 14.8
Total Expenditure 1,004 986 1.9 4,253 3,746 13.5
Operating Profit 117 194 (39.8) 784 326 140.6
OPM (%) 10.4 16.4 15.6 8.0
Interest 25.9 20.3 27.8 74.0 66.8 10.6
Depreciation 34.1 31.2 9.6 122.8 98.0 25.3
Other Income 1 1 (7.7) 11 10 7.9
PBT (excl. Extr. Items) 57 143 (59.9) 598 171 249.5
Exceptional Items - - - - - -
PBT (incl. Extr. Items) 57.5 143.4 (59.9) 598.2 171.2 249.5
(% of Sales) 5.1 12.2 11.9 4.2
Provision for Taxation 16.9 48.8 (65.3) 183.2 63.1 190.6
(% of PBT) 29.4 34.0 30.6 36.8
Reported PAT 40.6 94.7 (57.1) 415.0 108.1 283.8
PATM (%) 3.6 8.0 8.2 2.7
Equity capital (cr) 50.4 50.4 50.4 50.4
EPS (Rs) 0.8 1.9 (57.1) 8.2 2.1 283.8

Top-line declines 5% yoy, lockout at Perambra impacts volume: Standalone
top-line registered a decline of 5% yoy to Rs1,121cr (Rs1,180cr) in 1QFY2011,
came in below our estimates. Tonnage sold for the quarter declined 20% qoq to
66,000MT on account of the Perambra plant lockout due to labour unrest. The
plant shut down resulted in revenue loss of around ~Rs300cr (15,000MT of
production loss) during the quarter. However, price hikes taken during the quarter
- 5% in April 2010 in the OE segment and 7% in replacement segment - arrested
further decline in top-line.

July 30, 2010 2


Exhibit 2: Top-line declines on lock-out at Perambra facility
(Rs cr) Net Sales (LHS) Net Sales Growth (RHS) (%)
1,350 50
46.5

1,200 24.3 25
18.2

9.7
1,050 0

(5.0)

900 (25)
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11


OPM at 10.4%, contraction of 603bp on increase in rubber price: On the
operating front, the company reported 603bp yoy contraction in operating margin
at 10.4% (16.4%) during 1QFY2011, on a standalone basis. In absolute terms,
operating profit fell by 40% yoy to Rs117cr (Rs194cr). Apollo’s subdued
performance on the operating front was largely on account of the substantial
increase in raw material costs to the extent of 939bp yoy following sharp rise in
cost its key raw material - rubber. Despite the increase in product prices, the
company is not yet fully covered. Average rubber price for the company for
1QFY2011 stood at Rs165/kg (Rs140/kg in 4QFY2010 and Rs100 in 1QFY2010).
However, fall in other expenditure by a substantial 496bp yoy restricted further fall
in operating profit.

Exhibit 3: Average raw material cost/kg trend
Particulars 1QFY11 4QFY10 % qoq chg
Nylon Tyre Cord Fabric 205 195 5.1
Natural Rubber 165 140 17.9
Carbon Black 52 50 4.0

Exhibit 4: Increase in natural rubber prices... Exhibit 5: ... led to contraction in EBITDA margins
(Rs/kg) Average quarterly rubber prices (%) EBITDA Margin Raw Material Cost/Sales
200 75 67.8 68.2
165 64.7
141 58.8 60.1
135
150 120 118
98 102
50
100 78 72

50
25 16.4 16.4 15.5 14.1
10.4
0
1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

0

Source: Company, Angel Research, Crisil Research Source: Company, Angel Research

July 30, 2010 3


Net profit at Rs40.6cr, down 57.1%: During 1QFY2011, net profit registered a
substantial decline of 57.1% to Rs40.6cr (Rs95cr) primarily on account of lower
dispatches due to plant closure and margin contraction. Higher interest cost and
depreciation also impacted bottom-line to a certain extent, while capitalisation of
the Chennai plant resulted in lower tax rate in 1QFY2011.

Exhibit 6: Net profit down 57% on lower dispatches and margin contraction
(Rs cr) Net Profit (LHS) Net Profit Margin (RHS) (%)
150 12

8.8
8.4
8.0
7.7
100 8

3.6
50 4

0 0


July 30, 2010 4


Exhibit 7: Quarterly Performance (Consolidated)
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 % chg
Net Sales 1,821 1,635 11.4 8,117 4,995 62.5
Consumption of RM 940 867 8.3 4,149 3,228 28.5
(% of Sales) 51.6 53.0 51.1 64.6
Staff Costs 291.1 192.9 50.9 1,088.3 414.9 162.3
(% of Sales) 16.0 11.8 13.4 8.3
Purchases of TG 83 50 65.5 429 183 134.1
(% of Sales) 4.5 3.1 5.3 3.7
Other Expenses 309 319 (3.3) 1,268 747 69.8
(% of Sales) 17.0 19.5 15.6 14.9
Total Expenditure 1,622 1,429 13.5 6,933 4,573 51.6
Operating Profit 199 206 (3.5) 1,184 422 180.4
OPM (%) 10.9 12.6 14.6 8.5
Interest 33.8 30.7 10.3 134.3 111.8 20.2
Depreciation 63.8 54.4 17.3 254.2 128.5 97.8
Other Income 3 1 134.8 119 31 278.1
PBT (excl. Extr. Items) 104 122 (14.6) 914 213 328.3
Exceptional Items - - - (3.4) (0.6) -
PBT (incl. Extr. Items) 104.3 122.1 (14.6) 917.4 214.0 328.7
(% of Sales) 5.7 7.5 11.3 4.3
Provision for Taxation 30.2 48.5 (37.8) 260.7 74.2 251.2
(% of PBT) 28.9 39.7 28.4 34.7
Reported PAT 74.2 73.7 0.7 656.7 139.7 369.9
PATM (%) 4.1 4.5 8.1 2.8
Equity capital (cr) 50.4 50.4 50.4 50.4
EPS (Rs) 1.5 1.5 0.7 13.0 2.8 369.9

Consolidated Performance: The company however, reported healthy
performance at the consolidated level with both the subsidiaries reporting
good growth and also supported the company’ overall OPM. On a
consolidated basis, the company recorded 11.4% yoy jump in top-line and
marginal 1% increase in net profit at Rs74cr. Consolidated tonnage volume
for the quarter was 93,000MT. Operating margins, at the consolidated level,
stood at 10.9% (12.6%) in 1QFY2011.

Strategic investment in subsidiaries augurs well; arrested margin contraction to
certain extent: During 1QFY2011, Apollo’s subsidiary, Dunlop, registered
top-line of around Rs276cr and OPM of 6%. Top-line growth came solely on
the back of volume growth reflecting the slow recovery in the South African
markets. At the same time, the newly acquired Dutch tyre-maker, Vredestein
Banden, clocked turnover of Rs440cr in 1QFY2011 and registered OPM of
16%. Management is sanguine about clocking good growth for both the
entities.

July 30, 2010 5


Conference Call – Key Highlights

Rubber price and price hike action: Management expects natural rubber prices
to remain at current levels of ~ Rs185/kg in 2QFY2011, but expects it to
soften up by 2HFY2011. Rubber imports have increased as the international
rubber prices are ~ Rs30 lower than the domestic prices. The company
imports around 13 -15% of its rubber requirement, which could double in the
current quarter.

In the OEM category, the company hiked prices by 5% each in December
2009, February, April and July 2010. It was easy to pass on the raw material
increases to the OEM customers as they have a significant demand for tyres. In
the replacement segment, the company hiked prices by 5% in January 2010,
3.5% in May 2010, 3.5% in June 2010 and another 3% in July 2010.

Chennai green-field expansion on track: The Chennai green-field capacity is
progressing well and management expects to commission 100tpd in Phase 1
in FY2011, with 200tpd and 400tpd planned to be added in FY2012 and
FY2013, respectively. The expansion entails total investment of Rs2,000cr, out
of which around Rs1,000cr was invested by March 2010.

For FY2011, the company plans to incur overall capex of Rs1,300cr. The
Indian operations will see a major portion of the capex of Rs1,000cr being
incurred at the Chennai facility where it further intends to double existing
capacity for the passenger car tyres. Capex of around Rs120cr will be incurred
at the South African facility, while another Rs80cr will be spent at the European
subsidiary. For FY2012, Apollo plans to incur capex of Rs400cr at its Indian
facilities and maintenance capex across other locations. The company’s net
debt, on a consolidated basis, is Rs1,626cr, up from Rs1,360cr at end of
4QFY2010, which increased mainly to fund capex at the Chennai plant.

Overseas operations: The nation-wide port strike in South Africa resulted in
supply-side constraints, which in turn impacted volume off-take during the
quarter for Dunlop. Apollo has taken a 10% price hike in May in the South
African market. Vredestein continued to report robust volume off-take on
account of an extended winter driving tyre demand during the quarter. Apollo
hiked prices by 4% in May in the European market.

July 30, 2010 6


Investment Arguments

Tyre industry set for structural shift: Currently, manufacturing radial tyres is far
more capital intensive than cross-plys. Investment per tonnes per day (tpd) is
3.2x of cross-ply at Rs6.1cr/tpd. On the other hand, the selling price of radial
tyres is around 20% higher than the cross-ply tyres. Taking into account the
difference in capital requirements and consequent impact on asset turnover,
interest cost and depreciation, to generate similar RoCE and RoE, the tyre
companies would need to earn EBITDA margins of around 21% compared to
around 9% being earned on cross-ply tyres. Thus, higher capital requirements
will help protect margins from upward bound input costs, as the business
model evolves bearing in mind final RoEs rather than margins. With the sector
set for a structural shift and apparent pricing flexibility, it will result in an
improvement in RoCE and RoE of the tyre manufacturers going forward.

Riding on high domestic demand: The Indian Tyre industry is witnessing strong
demand from both the Replacement as well as the OEM markets, keeping
capacities running at peak. Apollo Tyres is poised to achieve market
leadership through increase in production from 820tpd in FY2010 to
1,100tpd in FY2012E.

Strategic overseas investment offers synergies in long term: The acquisitions
done by Apollo in the last 2-3 years are increasingly contributing to its
Revenues. We estimate Vredestein Banden combined with Dunlop SA to
contribute 30% to overall Consolidated Revenues, helping Apollo to further
strengthen its foothold in the Indian Tyre industry. Acquisitions offer synergies
by way of access to Radial tyre technology, wider product portfolio and
presence in newer geographies.

Outlook and Valuation

The tyre industry, during FY2010, benefited largely from the substantial decline in
raw material prices and spike in replacement demand. Going ahead, we are
positive on the sector as the OEM off-take is expected to improve on better overall
auto industry volume growth. The recent run up in raw material prices is however,
a concern and expected to exert pressure on OPMs. We expect the company to
clock EPS of Rs7.9 in FY2011E and Rs9.8 in FY2012E.

We believe that strong demand, prevailing high capacity utilisation levels and
higher investment requirements, would help the Indian tyre industry to arrest the
sharp decline in margins despite the upward move in input costs (rubber and
carbon black). Thus, we maintain a Buy on Apollo Tyres, with a Target Price of
Rs79, at which level the stock would trade at 8x, 5x and 1.4x FY2012E EPS,
EV/EBITDA and P/BV, respectively.

Key downside risk to our call: Sharp rise in input costs, slower growth in
international business and lower-than-anticipated growth in tyre off-take pose
downside risks to our estimates.

July 30, 2010 7


Exhibit 8: Angel v/s consensus forecast
Angel estimates Consensus Variation (%)
FY11E FY12E FY11E FY12E FY11E FY12E
Net Sales (Rs cr) 9,260 10,398 9,014 10,23 2.7 1.6
EPS (Rs) 7.9 9.8 8.8 10.8 (10.6) (9.1)
Source: Angel Research, Bloomberg

Exhibit 9: One-year forward P/E band Exhibit 10: One-year forward P/E chart
(Rs) Share Price (Rs) 1x 4x 7x 10x One-yr forward P/E Five-yr average P/E
160 20

120 15

80 10

40 5

0 0
May-06

May-07

Jul-10
Oct-03

Oct-04

Nov-05

Nov-06

Dec-07

Dec-08
Apr-03

Apr-04

Apr-05

Jun-08

Jun-09

Jan-10

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10
Source: Company, Angel Research, Bloomberg Source: Company, Angel Research, Bloomberg

Exhibit 11: One-year forward EV/EBITDA band Exhibit 12: One-year forward EV/EBITDA chart
(Rs cr) EV (Rs cr) 2x 4x 6x 8x One-yr forward EV/EBITDA Five-yr average EV/EBITDA
10,000 8

7,500 6

5,000 4

2,500 2

0 0
May-06

May-07

Jul-10
Apr-03

Apr-04

Apr-05
Oct-03

Oct-04

Nov-05

Nov-06

Dec-07

Dec-08

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Jun-08

Jun-09

Jan-10

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10

Source: Company, Angel Research, Bloomberg Source: Company, Angel Research, Bloomberg

Exhibit 13: Tyre - Recommendation summary
FY10-12E
CMP Tgt Price Upside P/E (x) EV/EBITDA (x) RoE (%)
Company Reco. EPS
(Rs) (Rs) (%)
FY11E FY12E FY11E FY12E FY11E FY12E CAGR (%)
Apollo Tyres* Buy 64 79 23.6 8.1 6.5 5.3 4.4 24.1 16.9 (12.9)
JK Tyre* Buy 164 237 44.6 4.2 3.5 4.2 2.8 9.7 15.9 (3.2)
Ceat Buy 134 164 22.2 5.3 3.3 5.1 3.7 18.7 15.0 (7.7)
Source: Company, Angel Research; Note: * FY2011E and FY2012E EPS on consolidated basis

July 30, 2010 8


Profit and Loss Statement (Consolidated)
Y/E March (Rs cr) FY07 FY08 FY09 FY10 FY11E FY12E
Gross sales 4,781 5,244 5,463 8,510 9,957 11,180
Less: Excise duty 490 549 468 393 697 783
Net Sales 4,291 4,695 4,995 8,117 9,260 10,398
Total operating income 4,291 4,695 4,995 8,117 9,260 10,398
% chg 64.2 9.4 6.4 62.5 14.1 12.3
Total Expenditure 3,892 4,098 4,573 6,933 8,328 9,297
Net Raw Materials 2,866 2,929 3,411 4,577 5,990 6,671
Other Mfg costs 272 338 337 542 532 598
Personnel 406 440 415 1,088 1,065 1,196
Other 348 390 410 726 741 832
EBITDA 400 597 422 1,184 932 1,101
% chg 78.5 49.5 (29.3) 180.4 (21.2) 18.1
(% of Net Sales) 9.3 12.7 8.5 14.6 10.1 10.6
Depreciation &
117.2 129.9 128.5 254.2 327.7 362.3
Amortisation
EBIT 282 467 294 930 605 738
% chg 87.2 65.6 (37.2) 216.5 (34.9) 22.1
(% of Net Sales) 6.6 10.0 5.9 11.5 6.5 7.1
Interest & other Charges 120 89 112 134 169 169
Other Income 34 26 31 119 126 133
(% of PBT) 17.1 6.5 14.7 12.9 22.3 18.9
Recurring PBT 196 405 213 914 562 703
% chg 60.7 106.4 (47.3) 328.3 (38.5) 25.1
Extraordinary Items (0.5) (0.3) (0.6) (3.4) - -
PBT 197 406 214 917 562 703
Tax 79 136 74 261 163 207
(% of PBT) 150.4 71.0 (45.3) 251.2 (37.6) 27.2
PAT 118 270 140 657 399 496
Less: Minority interest (MI) - - - - - -
PAT after MI (reported) 118 270 140 657 399 496
Adj. PAT 117 270 139 653 399 496
% chg 31.6 130.4 (48.4) 369.5 (38.9) 24.2
(% of Net Sales) 2.7 5.7 2.8 8.0 4.3 4.8
Basic EPS (Rs) 2.5 5.5 2.8 13.0 7.9 9.8
Fully Diluted EPS (Rs) 2.5 5.5 2.8 13.0 7.9 9.8
% chg 38.5 118.9 (50.0) 369.5 (38.9) 24.2

July 30, 2010 9


Balance Sheet (Consolidated)
SOURCES OF FUNDS
Equity Share Capital 46 49 50 50 50 50
Preference Capital - - - - - -
Reserves & Surplus 877 1,129 1,299 1,917 2,366 2,815
Shareholders’ Funds 923 1,178 1,350 1,968 2,417 2,865
Total Loans 823 646 891 1,707 2,107 2,107
Deferred Tax Liability 170 176 194 251 229 203
Total Liabilities 1,916 2,000 2,435 3,926 4,752 5,176
APPLICATION OF FUNDS
Gross Block 1,947 1,955 2,284 5,563 7,123 7,877
Less: Acc. Depreciation 681 750 882 3,120 3,448 3,810
Net Block 1,266 1,205 1,402 2,443 3,675 4,067
Capital Work-in-Progress 80 95 281 536 356 315
Goodwill 26 22 24 118 118 118
Investments 5 5 5 6 6 6
Current Assets 1,647 1,484 1,423 2,439 2,242 2,514
Cash 194 285 362 349 422 503
Loans & Advances 447 171 206 310 400 416
Other 1,006 1,028 855 1,780 1,421 1,595
Current liabilities 1,108 811 700 1,614 1,645 1,843
Net Current Assets 539 673 723 824 597 671
Mis. Exp. not written off - - - - - -
Total Assets 1,916 2,000 2,435 3,926 4,752 5,176

July 30, 2010 10


Cash Flow Statement (Consolidated)
Profit before tax 197 406 214 917 562 703
Depreciation 117 130 129 254 328 362
Change in Working Capital (28) 104 (67) 97 (432) 5
Less: Other income (288) 190 (306) (421) (1045) (129)
Direct taxes paid 79 136 74 261 163 207
Cash Flow from Operations 495 313 508 1428 1340 992
(Inc.)/Dec. in Fixed Assets (665) (18) (517) (3533) (1381) (713)
(Inc.)/Dec. in Investments (5) 0 0 (1) 0 0
(Inc.)/Dec. in loans and adv. (38) 18 (28) (111) (90) 16
Other income 34 26 31 119 126 133
Cash Flow from Investing (674) 27 (513) (3527) (1345) (564)
Issue of Equity 244 72 46 0 0 0
Inc./(Dec.) in loans 73 (177) 245 816 400 0
Dividend Paid (Incl. Tax) 24 29 27 44 29 47
Others (200) (173) (234) 1225 (352) (394)
Cash Flow from Financing 141 (249) 83 2086 78 (347)
Inc./(Dec.) in Cash (38) 91 77 (13) 73 81
Opening Cash balance 231 194 285 362 349 422
Closing Cash balance 194 285 362 349 422 503

July 30, 2010 11


Key Ratios
Y/E March FY07 FY08 FY09 FY10 FY11E FY12E
Valuation Ratio (x)
P/E (on FDEPS) 25.3 11.6 23.1 4.9 8.1 6.5
P/CEPS 12.7 7.8 12.0 3.5 4.4 3.8
P/BV 3.2 2.7 2.4 1.6 1.3 1.1
Dividend yield (%) 0.7 0.8 0.7 1.2 0.8 1.3
EV/Sales 0.8 0.7 0.7 0.6 0.5 0.5
EV/EBITDA 9.0 5.8 8.9 3.9 5.3 4.4
EV / Total Assets 1.9 1.7 1.5 1.2 1.0 0.9
Per Share Data (Rs)
EPS (Basic) 2.5 5.5 2.8 13.0 7.9 9.8
EPS (fully diluted) 2.5 5.5 2.8 13.0 7.9 9.8
Cash EPS 5.0 8.2 5.3 18.1 14.4 17.0
DPS 0.4 0.5 0.4 0.7 0.5 0.8
Book Value 19.9 24.1 26.8 39.0 47.9 56.8
DuPont Analysis
EBIT margin 6.6 10.0 5.9 11.5 6.5 7.1
Tax retention ratio 0.6 0.7 0.7 0.7 0.7 0.7
Asset turnover (x) 2.9 2.7 2.6 2.9 2.3 2.3
RoIC (Post-tax) 11.3 18.1 10.1 23.6 10.9 11.6
Cost of Debt (Post Tax) 9.1 8.0 9.5 7.4 6.3 5.6
Leverage (x) 0.7 0.5 0.3 0.6 0.7 0.6
Operating RoE 13.0 22.8 10.3 32.7 14.0 15.3
Returns (%)
RoCE (Pre-tax) 16.6 23.9 13.2 29.2 13.9 14.9
Angel RoIC (Pre-tax) 15.8 14.0 26.0 14.2 27.3 16.4
RoE 12.7 18.4 16.2 24.0 24.1 16.9
Turnover ratios (x)
Asset Turnover (Gross Block) 2.6 2.4 2.4 2.1 1.5 1.4
Inventory / Sales (days) 45 53 49 36 33 33
Receivables (days) 23 26 20 23 23 23
Payables (days) 51 58 47 43 53 50
WC cycle (ex-cash) (days) 29 28 27 19 13 6
Solvency ratios (x)
Net debt to equity 0.7 0.3 0.4 0.7 0.7 0.6
Net debt to EBITDA 1.6 0.6 1.2 1.1 1.8 1.5
Interest Coverage (EBIT/Interest) 2.4 5.3 2.6 6.9 3.6 4.4

July 30, 2010 12


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

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risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please
refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and
its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Apollo Tyres
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

July 30, 2010 13

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