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Nirmal Bang Report
We have raised our margin estimates by ~90 basis points for FY24/FY25 each while volume estimates have been upped by 3% each for FY24/FY25.
We have seen a ~20% correction over average prices of Q1 FY23 in the TSR20 (a composite index of all the raw materials used in tyre making), ~15% correction in Indian Kottayam rubber and ~35% correction in the Thai rubber index.
With crude oil sustaining below $90/barrel of oil will lead to further correction in synthetic rubber prices, which have already declined by ~15% from Q1 FY23 average prices.
Furthermore, Apollo Tyres’ market leadership in truck-bus radial and passenger car radial segments is leading to improving pricing power (8% price hike in Q1 FY23 and 2-3% in Q2 FY23 in PCR), which would further aid margins.
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