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Apollo Tyres Q1FY22 Results & Conference Call Highlights

Apollo Tyres Q1FY22 Results & Conference Call Highlights

Published on 11 August 2021 Views 33 Comments 0

Consolidated Q1FY22 Financials

  • The  consolidated revenue from operations in Q1FY22 stood at Rs. 4,584.5 crores, a growth of 59% YoY and decline of (-9%) QoQ. Massive impact in Q1FY21 due to pandemic.
  • Healthy demand momentum expected in Indian and European geographies.
  • The company registered Q1FY22 EBITDA at Rs. 566.8 crores. EBITDA declined by (-30%) QoQ and increased by 131% YoY.
  • EBITDA margin for Q1FY22 was 12.4%. For Q1FY21 it was 8.5% and for Q4FY21 it was 16.2%. RM price increase led to decline in EBITDA margins.
  • Profit after Tax stood at Rs. 127.8 crores as compared to a loss of nearly Rs. (-135) crores in Q1FY21. The PAT has declined by nearly (-55.5%) QoQ.
  • The PAT margin was 2.8% in Q1FY22 and 5.7% in Q4FY21

Standalone Q1FY22 Financials

  • The standalone revenue from operations in Q1FY22 stood at Rs. 3,220 crores, a growth of 82% YoY and decline of (-11%) QoQ.
  • The company registered Q1FY22 EBITDA at Rs. 333.6 crores. EBITDA declined by (-41%) QoQ and increased by 74% YoY.
  • EBITDA margin for Q1FY22 was 10.4%. For Q1FY21 it was 10.8%. A sharp decline in EBITDA margin as Q4FY21 margin was 15.4%.
  • Profit after Tax stood at Rs. 67.9 crores as compared to a loss of nearly Rs. (-53.6) crores in Q1FY21. The PAT has declined by nearly (-70%) QoQ.
  • The PAT margin was 2.1% in Q1FY22 and 6.2% in Q4FY21.
  • The CAPEX for YTD FY22 stood at Rs. 500 crores. The impact of second wave less to a negative free cash flow of Rs. 600 crores in the same period. These 2 factors ultimately resulted in increase of net debt to Rs. 4800 crores.

Business Highlights

  • The company has expanded its rural footprint to 6,200 outlets (including sub dealers). In FY21, there were 5,800 outlets. Hence an increase of 400 outlets in Q1FY22.
  • Steady pickup in demand momentum in India from June 2021.
  • Optimistic in industry outlook in near term and bullish in longer term.
  • Q1FY22 impacted due to second wave of pandemic in India and rising raw material cost pressures.
  • Strong operational performance in Europe helped partially negate the margin decline in Indian operation.
  • Pricing environment remains stable in the industry.
  • The company has gained market share in 3 business segments.
  • OE sales for the company have been significantly impacted.
  • Operating margins were largely impacted due to Raw material pressures.
  • The company has taken 3%-4% price increase across product categories in Q1FY22. Already announced further price increase in upcoming quarter.
  • Europe reported strong operating performance in Q1FY22 in profitability.
  • Maximum impact of COVID second wave and lockdown was faced in May and since then the company has been witnessing steady demand recovery since then.
  • The company put thrust on export to counter reduced domestic demand, resulting in highest ever export turnover in Q1FY22.

Con-call Highlights

  • The company has faced 11% volume decline in India on QoQ basis.
  • The good amount of exports during Q1FY22 are sustainable in future. The company has been improving its presence in North America, South American and ASEAN region.
  • The exports have been impacted due to issues faced due container and freight problems.
  • RM cost increase of 5% is expected in Q2FY22. The company will be taking 3%-4% price increase in Q2FY22 to offset the RM price rise.
  • The company is witnessing strong demand coming across categories. The only area where demand recovery has not been good is truck OEMs. The recovery in truck OEM segment could take another quarter.
  • Prices of raw materials per Rs/kg are: Natural rubber - 170, Synthetic rubber - 155, Carbon Black - 90 and Steel Cord - 155.
  • CAPEX plans in FY22 are of about Rs. 1,800 crores mark. The company will also be doing Rs. 200 crores CAPEX in Europe. Hence, total CAPEX in FY22 is Rs. 2,000 crores. No big growth CAPEX planned as of now in FY23.
  • The company expects the exports to increase to 15% of total sales in FY22.
  • Exports to other region is a mix from European and Indian plants.
  • Domestic replacement is most profitable segment currently.
  • The European business focus currently is on Ultra High Performance Tyres.
  • EBITDA margins in Q1FY22 for European Business stood at 16%.
  • Standalone Employee costs can increase due to hiring at AP plant and ongoing wage negotiation at Kerala unit.
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