4QFY2012 Result Update | Tyre

May 10, 2012

Apollo Tyres
Performance Highlights
Y/E March - Consolidated (` cr) Net sales EBITDA EBITDA margin (%) Adjusted PAT
Source: Company, Angel Research

BUY
CMP Target Price
% chg (yoy) Angel est. 18.4 16.9 (15)bp (18.6) 3,344 348 10.4 146 % diff. (3.4) 3.6 75bp 7.2

`82 `100
12 Months

4QFY12 4QFY11 3,231 360 11.1 157 2,730 308 11.3 193

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Tyre 4,123 1.1 95/51 411,032 1 16,420 4,966 APLO.BO APTY@IN

Mixed performance on the consolidated front: Apollo Tyres (APTY) reported a mixed set of 4QFY2012 results, as strong performance in domestic operations was overshadowed by poor South African operations. APTYs consolidated top line jumped by 18.4% yoy (flat qoq) to `3,231cr, driven by 8.8% yoy growth each in total volumes and net average realization. While domestic operations witnessed strong 14% yoy growth in volumes, Europe witnessed 4% yoy volume growth and South Africa witnessed an 18% yoy decline in volumes as its operations were impacted by planned shutdowns and rising threat of imported tyres. The companys EBITDA margin expanded by 110bp sequentially (down 15bp yoy) to 11.1%, mainly due to margin improvement in the domestic business (EBITDA margin improved 200bp yoy and 160bp sequentially) led by lower raw-material expenses. Net profit declined by 18.6% yoy to `157cr mainly on account of higher interest (up 31.5%) and depreciation (up 22.1%) expenses. Healthy standalone performance: APTYs standalone net sales grew by strong 28.2% yoy (7.9% qoq) to `2,259cr, driven by volume growth of 14% yoy (6.5% qoq) and net average realization growth of 12.5% yoy (1.3% qoq). EBITDA margin expanded by 200bp yoy (160bp qoq) to 9.6%, largely due to a decline in raw-material expenses, leading to 61.9% yoy growth in operating profit. However, net profit grew by just 9.2% yoy to `72cr, led by higher interest, depreciation and tax expenses during the quarter. Outlook and valuation: We revise upwards our earnings estimates for FY2013/14E at the standalone level, led by the likely improvement in OEM demand as well as replacement segments and stable raw-material prices. We expect APTY to deliver a healthy revenue CAGR of 11.8% over FY201214E, led by production ramp-up at Chennai facility and revival in South Africa operations. We expect the companys operating margin to improve in FY2013E, driven by gradual softening of raw-material prices. At `82, APTY is trading at attractive levels of 6.1x FY2014E earnings. We maintain our Buy rating on the stock with a target price of `100.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 46.9 20.0 23.3 9.8

Abs. (%) Sensex Apollo Tyres

3m 8.3

1yr

3yr 38.3

(7.5) (11.3)

13.8 205.2

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 8,868 9.2 440 (32.6) 10.9 8.7 9.4 1.7 20.1 15.2 0.7 6.6

FY2012E 12,153 37.1 439 (0.2) 9.6 8.7 9.3 1.5 16.8 15.4 0.5 5.6

FY2013E 13,699 12.7 610 38.8 10.5 12.1 6.8 1.2 19.7 18.7 0.5 4.4

FY2014E 15,184 10.8 671 10.1 10.1 13.3 6.1 1.0 18.4 18.7 0.4 3.9

Yaresh Kothari
022-3935 7800 Ext: 6844 [email protected]

Please refer to important disclosures at the end of this report

Apollo Tyres | 4QFY2012 Result Update

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) Net sales Consumption of RM (% of sales) Staff costs (% of sales) Purchases of TG (% of sales) Other expenses (% of sales) Total expenditure EBITDA EBITDA margin (%) Interest Depreciation Other Income PBT (excl. extr. Items) Exceptional items PBT (incl. extr. Items) (% of sales) Provision for taxation (% of PBT) Reported PAT PATM (%) Equity capital (cr) EPS (`)
Source: Company, Angel Research

4QFY12 2,259 1,635 72.4 95 4.2 53 2.3 259 11.5 2,042 217 9.6 75 52 16 106 106 4.7 33 31.5 72 3.2 50.4 1.4

4QFY11 1,762 1,279 72.6 75 4.2 48 2.7 227 12.9 1,628 134 7.6 53 39 39 81 81 4.6 14 17.9 66 3.8 50.4 1.3

% chg 28.2 27.9 26.8 11.7 14.4 25.5 61.9 40 34 (60.0) 30.8 30.8 129.9 9.2

FY2012 8,158 5,997 73.5 369 4.5 238 2.9 888 10.9 7,492 666 8.2 241 186 18 258 258 3.2 76 29.6 181 2.2 50.4

FY2011 5,490 3,712 67.6 307 5.6 159 2.9 791 14.4 4,969 521 9.5 159 147 49 264 264 4.8 65 24.8 198 3.6 50.4 3.9

% chg 48.6 61.5 20.1 49.5 12.3 50.8 27.8 51.8 26.0 (62.5) (2.3) (2.3) 16.7 (8.5)

9.2

3.6

(8.5)

Net sales up 28.2% yoy on a 14% yoy increase in volumes: On a standalone basis, APTY registered strong top-line growth of 28.2% yoy (7.9% qoq) to `2,259cr, backed by a strong 14% yoy increase each in volumes and net average realization, respectively. Volume growth was led by strong OEM demand during the quarter due to which proportion of OEM sales increased to ~34%.

May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

Exhibit 2: Standalone net sales up 28.2% yoy on 14% volume growth

(`cr) 2,500 2,000 1,500 1,000 500 0 18.2 8.2 (5.0) (3.7) 34.2 Net sales yoy change (RHS) 74.9 56.9 46.2 28.2 (%) 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 (10.0) (20.0)

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

Source: Company, Angel Research; Note: Standalone performance

Operating margin improves to 9.6%: APTY reported a 200bp yoy (166bp qoq) expansion in operating margin to 9.6%, driven largely on account of easing raw-material cost pressures, primarily natural rubber, and decline in other expenditure. While average natural rubber cost declined by 6.7% sequentially, cost of other raw materials such as NTC and carbon black increased due to INR depreciation. Raw-material to net sales ratio witnessed a 60bp yoy contraction and stood at 74.7%. As a result, operating profit jumped by 61.9% yoy (29.5% qoq) to `217cr during the quarter. Margin expansion, to some extent, was restricted due to unfavorable product mix (in favor of OEM).

Exhibit 3: Average raw-material cost trend

Particulars Nylon Tyre Cord Fabric Natural Rubber Carbon Black
Source: Company, Angel Research

4QFY12 210 255 75

4QFY11 225 230 57

% chg (yoy) (6.7) 10.9 31.6

3QFY12 223 250 73

4QFY12

% chg (qoq) (5.8) 2.0 2.7

Exhibit 4: Decline in natural rubber prices...

(`/kg) 250.0 200.0 150.0
99 120 136 78 98 102 72 142 119 165 177 195 225 229 211 203

Exhibit 5: ...leads to EBITDA margin improvement

(%) 90.0
191

EBITDA margin 67.8 68.2 67.1 69.3 75.3

Raw material cost/sales 76.6 77.8 76.9 74.7

80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0

100.0 50.0 0.0

14.1

10.4

10.3

10.4

7.6

8.0

6.8

8.0

9.6

4QFY08

2QFY09

4QFY09

2QFY10

4QFY10

2QFY11

4QFY11

2QFY12

4QFY12

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

Source: Company, Crisil Research, Angel Research

Source: Company, Angel Research; Note: Standalone performance

May 10, 2012

4QFY12

Apollo Tyres | 4QFY2012 Result Update

Standalone net profit up 9.2% yoy: Net profit for the quarter witnessed modest 9.2% yoy (69.7% qoq) growth to `72cr despite strong growth in operating profit. This can be attributed to higher interest (up 40.2% yoy) and depreciation expense (up 34.4% yoy), led by ramping up of Chennai facility. Further, lower other income (down yoy) and high tax rate (31.5% in 4QFY2012) restricted the companys profitability during the quarter. Exhibit 6: Net profit up 9.2% yoy
(` cr) 140 120 100 80 60 40 20 0 3.6 3.2 3.8 3.8 2.3 1.2 2.0 3.2 Net profit 8.8 Net profit margin (RHS) (%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

Source: Company, Angel Research; Note: Standalone performance

May 10, 2012

4QFY12

Apollo Tyres | 4QFY2012 Result Update

Exhibit 7: Quarterly performance (Consolidated)

Y/E March (` cr) Net sales Consumption of RM (% of sales) Staff costs (% of sales) Purchases of TG (% of sales) Other expenses (% of Sales) Total expenditure EBITDA EBITDA margin (%) Interest Depreciation Other Income PBT (excl. extr. items) Exceptional Items PBT (incl. extr. items) (% of sales) Provision for taxation (% of PBT) Share in loss/(profit) of associates Minority interest Reported PAT Adjusted PAT PATM (%) Equity capital Reported EPS (`) Adjusted EPS (`)
Source: Company, Angel Research

4QFY12 4QFY11 3,231 1,891 58.5 302 9.4 202 6.2 476 14.7 2,871 360 11.1 87 90 26 210 210 6.5 51.5 24.6 1 (0) 157 157 4.9 50.4 3.1 3.1 2,730 1,612 59.1 229 8.4 149 5.5 431 15.8 2,421 308 11.3 66 74 42 210 210 7.7 18 8.4 (0) 0 193 193 7.1 50.4 3.8 3.8

% chg FY2012 FY2011 18.4 17.3 32.0 35.4 10.4 18.6 16.9 31.5 22.1 (37.2) (0.3) (0.3) 191.3 12,153 7,379 60.7 1,335 11.0 658 5.4 1,615 13.3 10,987 1,166 9.6 287 326 33 586 29 556 4.6 144.4 25.9 2 (0) (18.6) (18.6) 410 439 3.6 50.4 (18.7) (18.7) 8.1 8.7 8,868 4,841 54.6 1,134 12.8 481 5.4 1,446 16.3 7,903 965 10.9 197 272 51 547 547 6.2 106.3 19.4 1 (0) 440 440 5.0 50.4 8.7 8.7

% chg 37.1 52.4 17.7 36.7 11.7 39.0 20.8 45.9 19.7 (35.9) 7.1 1.7 35.8

(6.9) (0.2)

(6.9) (0.2)

Consolidated performance: For 4QFY2012, APTY registered strong net sales growth of 18.4% yoy (flat qoq) to `3,231cr, driven by 8.8% yoy growth each in total volumes and net average realization. Indian operations were the prime growth driver, with total sales increasing by 28.2% yoy, driven by 14% growth each in volumes and net average realization. While European operations witnessed slightly lower-than-expected growth of 8.7% yoy, poor performance in South Africa impacted the overall performance. South Africa operations witnessed an 18% yoy decline in volumes, led by poor demand, higher imports and on account of plant shutdown due to national as well as company-specific issues. On the operating front, the companys margin expanded by 110bp sequentially (flat on yoy basis) to 11.1%, mainly due to margin improvement in the domestic business (EBITDA margin improved by 200bp yoy and 160bp sequentially), led by a decline in raw-material expenses. However, weak performance in South Africa nullified the positive impact of strong domestic performance. While South Africa operations reported operating loss largely due to a decline in volumes, Europe operations witnessed a 200bp margin contraction sequentially during the quarter. Net profit declined by 18.6% yoy to `157cr mainly on account of higher interest
May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

(up 31.5%) and depreciation (up 22.1%) expense and lower other income (down 37%). Further, higher tax rate (24.6% as against 8.4% in 4QFY2011) impacted the companys bottom line negatively.

Exhibit 8: Segmental performance

4QFY12 4QFY11 Revenue (` cr) India South Africa Europe Others EBIT (` cr) India South Africa Europe Others EBIT margin (%) India SA Europe
Source: Company, Angel Research

% chg 28.2 (4.1) 8.7 -

FY2012 FY2011 8,158 1,305 2,850 105 5,490 1,183 2,234 -

% chg 48.6 10.3 27.5 -

2,259 339 677 29

1,762 354 623 -

180.4 (11.2) 119.0 5.4

134.1 25.1 116.5 (1.2)

34.6 (144.5) 2.2 (559.9)

498.8 (43.3) 386.4 1.4

422.5 32.5 299.2 (3.0)

18.1 (233.4) 29.1 (146.9)

8.0 (3.3) 17.6

7.6 7.1 18.7

6.1 (3.3) 13.6

7.7 2.7 13.4

Conference call Key highlights

Management expects standalone business momentum (expects growth of ~20% in FY2013E) to continue, led by double-digit growth expected in the truck segment, while passenger cars is likely to witness high single-digit growth. South Africa is expected to grow on the back of growth in the cars and truck segments. Demand in Europe is likely to remain weak in FY2013. Overall, management expects the companys consolidated top line to grow by ~15% in FY2013E. Management expects raw-material prices to remain stable in FY2013. However, adverse forex movement remains a major concern as two-thirds of total raw material is imported. APTY took an average price increase of ~1% in the domestic truck segment in May 2012. In South Africa, the company increased prices by ~3% each in February and April 2012. Ramp-up at Chennai facility is on track. Current production is at 300MT/day and is expected to reach 450MT/day by 3QFY2012. APTY does not intend to incur any major capex in FY2013, except for maintenance capex, which will be around `300cr. Of this, around `100cr-120cr will be for Indian operations and rest for overseas. On a consolidated basis, net debt stood at `2,700cr as of March 2012 (`2,900cr as of December 2011). According to management, radialization levels in the TBR segment increased to ~17% in FY2012.
May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

Investment arguments
Tyre industry set for a structural shift: Currently, manufacturing radial tyres is far more capital intensive than manufacturing cross-ply tyres. Investment required for radial tyres per tpd is 3.2x that of cross-ply tyres at `6.1cr/tpd. On the other hand, the selling price of radial tyres is ~20% higher than that of cross-ply tyres. Thus, to generate similar RoCE and RoE, tyre companies would need to earn EBITDA margin of ~21% compared to ~9% earned on cross-ply tyres, considering the difference in capital requirements and the consequent impact on asset turnover, interest cost and depreciation. Therefore, 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 the apparent pricing flexibility, RoCE and RoE of tyre manufacturers are expected to improve going forward. Riding on high domestic demand: The Indian tyre industry is witnessing strong demand from the replacement as well as OEM markets, keeping capacities running at peak. APTY is poised to achieve market leadership on the back of increasing production from 820tpd in FY2010 to ~1,300tpd in 1HFY2013E. Strategic overseas investment offers synergies in the long term: Acquisitions done by the company in the past two-three years are increasingly contributing to its revenue. We estimate Vredestein Banden combined with Dunlop SA to contribute close to 35% to the companys overall consolidated revenue, helping it 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

We revise upwards our earnings estimates for FY2013/14E at the standalone level, driven by the likely improvement in demand in the OEM as well replacement segments and stable raw-material prices.

Exhibit 9: Change in estimates

Y/E March (` cr) Net sales OPM (%) EPS (`) Earlier Estimates FY2013E 13,580 10.1 10.5 FY2014E 15,007 10.2 12.5 Revised Estimates FY2013E 13,699 10.5 12.1 FY2014E 15,184 10.1 13.3 % chg FY2013E 0.9 41bp 14.8 FY2014E 1.2 (0)bp 6.5

Source: Company, Angel Research

We remain positive on the tyre industry in view of the structural shift that the industry is witnessing and due to softening raw-material prices, mainly natural rubber. We expect the company to deliver a healthy revenue CAGR of 11.8% over FY201214E, led by production ramp-up at Chennai facility and revival in South Africa operations. We expect the companys operating margin to improve in FY2013E, driven by gradual softening of raw-material prices.

May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

At `82, APTY is trading at attractive levels of 6.1x FY2014E earnings. We maintain our Buy rating on the stock with a target price of `100. Key downside risks to our call: A sharp rise in input costs from current levels, slower growth in international business and lower-than-anticipated domestic replacement demand pose downside risks to our estimates.

Exhibit 10: Angel vs. consensus forecast

Angel estimates FY13E Net sales (` cr) EPS (`)
Source: Bloomberg, Angel Research

Consensus FY13E 11.0 FY14E 12.6

Variation (%) FY13E FY14E 0.2 10.2 2.0 5.7

FY14E 13.3

13,699 12.1

15,184 13,669 14,888

Exhibit 11: One-year forward P/E band

(`) 160 140 120 100 80 60 40 20 0
Jul-05 Jul-08 Jan-04 Jan-07 Jan-10 Jul-11 Apr-03 Apr-06 Apr-09 Oct-04 Oct-07 Oct-10 Apr-12

Exhibit 12: One-year forward P/E chart

8x 11x (x) 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0
Jun-07 Mar-06 Aug-08 Jan-08 Apr-09 Jun-10 Nov-09 Oct-06 Feb-11 Sep-11 Apr-12 Jul-05

Share Price (`)

2x

5x

One-yr forward P/E

Five-yr average P/E

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

Exhibit 13: One-year forward EV/EBITDA band

(` cr) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Dec-03 Aug-04 Dec-10 Jan-06 Jun-07 Mar-10 Aug-11 Apr-03 Feb-08 Sep-06 Oct-08 May-05 Apr-12 Jul-09

Exhibit 14: One-year forward EV/EBITDA chart

8.0 (x) 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Feb-11 Jul-05 Mar-06 Aug-08 Sep-11 Jun-07 Jan-08 Apr-09 Jun-10 Oct-06 Nov-09 Apr-12

EV (`cr)

2.0

4.0

6.0

One-yr forward EV/EBITDA

Five-yr average EV/EBITDA

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

Exhibit 15: Tyre - Recommendation summary

Company Apollo Tyres* Ceat JK Tyre* Reco. Buy Buy Buy CMP (`) 82 97 76 Tgt. price (`) 100 164 113 Upside (%) 22.1 68.5 48.3 P/E (x) FY12E 6.8 2.5 3.1 FY13E 6.1 2.4 2.4 EV/EBITDA (x) FY12E 4.4 3.6 5.2 FY13E 3.9 3.5 4.9 RoE (%) FY12E 19.7 18.8 11.4 FY13E 18.4 16.5 13.2 FY11-13E EPS CAGR (%) 15.1 84.7 26.1

Source: Company, Angel Research; Note: *Consolidated

May 10, 2012

Apollo Tyres | 4QFY2012 Result Update

Profit and Loss Statement (Consolidated)

Y/E March (` cr) Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amort. EBIT % chg (% of Net Sales) Interest & other charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Items PBT Tax (% of PBT) PAT (reported) Adj. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY09 4,995 6.4 4,573 3,411 337 415 410 422 (29.3) 8.5 129 294 (37.2) 5.9 112 31 14.7 213 (47.3) (1) 214 74 34.7 140 139 (48.4) 2.8 2.8 2.8 (50.0) FY10 8,121 62.6 6,936 4,581 539 1,088 727 1,185 180.7 14.6 254 931 216.9 11.5 134 117 13.7 914 328.3 59 855 261 30.5 594 653 369.5 8.0 11.8 13.0 369.5 FY11 8,868 9.2 7,903 5,322 648 1,134 798 965 (18.6) 10.9 272 693 (25.5) 7.8 197 51 9.3 547 (40.1) 547 106 19.4 440 440 (32.6) 5.0 8.7 8.7 (32.6) FY12E 12,153 37.1 10,987 8,037 546 1,335 1,069 1,166 20.8 9.6 326 840 21.3 6.9 287 33 5.9 586 7.1 29 556 144 25.9 410 439 (0.2) 3.6 8.1 8.7 (0.2) FY13E 13,699 12.7 12,263 8,756 630 1,644 1,233 1,436 23.1 10.5 342 1,094 30.1 8.0 258 36 4.1 871 48.7 871 261 30.0 610 610 38.8 4.5 12.1 12.1 38.8 FY14E 15,184 10.8 13,643 9,726 720 1,828 1,370 1,541 7.3 10.1 363 1,178 7.7 7.8 258 39 4.1 959 10.1 959 288 30.0 671 671 10.1 4.4 13.3 13.3 10.1

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Apollo Tyres | 4QFY2012 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 2,284 882 1,402 281 24 5 1,423 362 206 855 700 723 2,435 5,563 3,120 2,443 536 118 6 2,439 349 310 1,780 1,614 824 3,926 6,903 3,501 3,403 503 117 11 3,290 191 395 2,704 2,113 1,177 5,210 7,624 3,826 3,798 557 117 17 3,901 173 583 3,144 2,697 1,204 5,691 7,964 4,169 3,796 581 117 21 4,331 130 658 3,544 2,828 1,504 6,018 8,436 4,531 3,904 616 117 26 5,020 363 729 3,929 3,075 1,945 6,607 50 1,299 1,350 891 194 2,435 50 1,917 1,968 1,707 251 3,926 50 2,362 2,413 1 2,480 316 5,210 50 2,774 2,825 1 2,550 316 5,691 50 3,301 3,352 1 2,350 316 6,018 50 3,890 3,940 1 2,350 316 6,607 FY09 FY10 FY11 FY12E FY13E FY14E

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Apollo Tyres | 4QFY2012 Result Update

Cash Flow Statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Others Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balance Closing Cash balance FY09 213 129 32 212 (31) (74) 480 (517) 0 31 (485) 46 245 27 (234) 83 77 285 362 FY10 914 254 (115) 637 (117) (261) 1,312 (3,533) (1) 117 (3,417) 816 44 1,231 2,091 (13) 362 349 FY11 547 272 (510) 263 (51) (106) 415 (1,307) (5) 51 (1,262) 773 29 (114) 689 (158) 349 191 FY12E 586 326 (45) (33) (144) 689 (774) (6) 33 (747) 70 29 40 (18) 191 173 FY13E 871 342 (343) (36) (261) 573 (365) (4) 36 (334) -(200) 83 (283) (43) 173 130 FY14E 959 363 (208) (39) (288) 787 (506) (5) 39 (471) 83 (83) 233 130 363

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Apollo Tyres | 4QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT/Int.) 0.4 1.2 2.6 0.7 1.1 6.9 0.9 2.4 3.5 0.8 2.0 2.9 0.7 1.5 4.2 0.5 1.3 4.6 2.4 49 20 47 28 2.1 36 23 41 19 1.4 57 36 61 30 1.7 58 37 60 30 1.8 58 37 62 32 2.0 58 37 61 36 13.2 14.2 11.0 29.3 26.0 39.4 15.2 13.8 20.1 15.4 15.2 16.8 18.7 18.6 19.7 18.7 18.9 18.4 5.9 0.7 2.6 10.1 9.5 0.3 10.3 11.5 0.7 2.9 22.9 7.2 0.6 31.8 7.8 0.8 2.1 13.0 7.6 0.8 17.5 6.9 0.7 2.3 11.8 8.5 0.9 14.8 8.0 0.7 2.4 13.4 7.4 0.7 17.9 7.8 0.7 2.5 13.6 7.7 0.6 17.0 2.8 2.8 5.3 0.4 26.8 11.8 13.0 16.8 0.7 39.0 8.7 8.7 14.1 0.5 47.9 8.1 8.7 14.6 0.5 56.0 12.1 12.1 18.9 1.4 66.5 13.3 13.3 20.5 1.4 78.2 29.6 15.4 3.1 0.6 0.9 11.0 1.9 6.3 4.9 2.1 0.9 0.7 4.6 1.4 9.4 5.8 1.7 0.6 0.7 6.6 1.2 9.3 5.6 1.5 0.6 0.5 5.6 1.1 6.8 4.3 1.2 1.7 0.5 4.4 1.1 6.1 4.0 1.0 1.7 0.4 3.9 0.9 FY09 FY10 FY11 FY12E FY13E FY14E

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Apollo Tyres | 4QFY2012 Result Update

Research Team Tel: 022 - 3935 7800 DISCLAIMER

E-mail: [email protected]

Website: www.angelbroking.com

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and 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 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Apollo Tyres No No No No

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

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 10, 2012

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