#SALES #GROWTH 5 Year CAGR 17.3%
In FY24, revenue stood at โน3,552 cr, up by 13%. In cc terms, revenue grew by 9.6%. Growth in transportation was driven by overall uptick in SDV (software defined vehicle) demand despite deal rampdown delays, in healthcare, demand for new product engineering led to modest growth. However, media & communication witnessed a flattish growth due to sector headwinds as well as one-time impact of a client ramp down on account of its merger. In H1 FY25, revenue stood at โน1,882 cr, up by 9% YoY. In cc terms, revenue increased by ~7% YoY. Continued traction in design, software & digital technologies led to robust revenue performance, led by the Transport vertical backed by growth in SDV & OEM business and large deals. Communications continued to be down on account of weak macro while healthcare was down due to delay in renewal of certain projects. Region wise, growth was broad based except US due to communications, majorly led by India & Japan.
In FY24, revenue stood at โน3,552 cr, up by 13%. In cc terms, revenue grew by 9.6%. Growth in transportation was driven by overall uptick in SDV (software defined vehicle) demand despite deal rampdown delays, in healthcare, demand for new product engineering led to modest growth. However, media & communication witnessed a flattish growth due to sector headwinds as well as one-time impact of a client ramp down on account of its merger. In H1 FY25, revenue stood at โน1,882 cr, up by 9% YoY. In cc terms, revenue increased by ~7% YoY. Continued traction in design, software & digital technologies led to robust revenue performance, led by the Transport vertical backed by growth in SDV & OEM business and large deals. Communications continued to be down on account of weak macro while healthcare was down due to delay in renewal of certain projects. Region wise, growth was broad based except US due to communications, majorly led by India & Japan.
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#EBITDA #GROWTH 5 Year CAGR 20.3%
The company reported EBITDA of โน1,046 cr during FY24, a growth of 9%. Employee costs were up by 20% while other expenses were up by 1%. Continued employee additions along with higher investment on technology infrastructure led to higher expenses. However, sustained revenue growth along with optimized cost of sales aided profitability. In H1 FY25, EBITDA stood at ~โน519 cr, higher by ~1% YoY. Overall, operational costs were higher by 12% YoY, majorly due to other expenses increase by 27% YoY and employee cost rise of 10% YoY. Other expenses were higher due to an exceptional cost of ~โน20 cr related to contribution to โProgressive Electoral Trustโ in Q1 FY25.
The company reported EBITDA of โน1,046 cr during FY24, a growth of 9%. Employee costs were up by 20% while other expenses were up by 1%. Continued employee additions along with higher investment on technology infrastructure led to higher expenses. However, sustained revenue growth along with optimized cost of sales aided profitability. In H1 FY25, EBITDA stood at ~โน519 cr, higher by ~1% YoY. Overall, operational costs were higher by 12% YoY, majorly due to other expenses increase by 27% YoY and employee cost rise of 10% YoY. Other expenses were higher due to an exceptional cost of ~โน20 cr related to contribution to โProgressive Electoral Trustโ in Q1 FY25.
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#PAT #GROWTH 5 Year CAGR 22.3%
In FY24, PAT was up by 5% to โน792 cr. Finance costs and depreciation expenses were higher by 27% and 22%, respectively, majorly due to higher lease liabilities. Other income was higher by 65%, out of which forex gain increase was 41%. Higher revenue growth coupled with other efficiencies led to a modest PAT growth. In H1 FY25, PAT stood at โน414 cr, up by 6% YoY. Finance costs and depreciation were higher by 4% and 17% respectively on a YoY basis. Additionally, tax expenses were higher by 12% as one of their facilities was out of the SEZ unit leading to higher tax rate, slightly offset by tax credits of โน19 cr. Other income was higher by 76% YoY leading to sustained profitability, due to UK R&D credits of ~โน14 cr. Additionally, interest on certain tax refund orders amounting to โน14 cr also led to higher other income.
In FY24, PAT was up by 5% to โน792 cr. Finance costs and depreciation expenses were higher by 27% and 22%, respectively, majorly due to higher lease liabilities. Other income was higher by 65%, out of which forex gain increase was 41%. Higher revenue growth coupled with other efficiencies led to a modest PAT growth. In H1 FY25, PAT stood at โน414 cr, up by 6% YoY. Finance costs and depreciation were higher by 4% and 17% respectively on a YoY basis. Additionally, tax expenses were higher by 12% as one of their facilities was out of the SEZ unit leading to higher tax rate, slightly offset by tax credits of โน19 cr. Other income was higher by 76% YoY leading to sustained profitability, due to UK R&D credits of ~โน14 cr. Additionally, interest on certain tax refund orders amounting to โน14 cr also led to higher other income.
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#PAT #GROWTH 5 Year CAGR 22.3%
In FY24, PAT was up by 5% to โน792 cr. Finance costs and depreciation expenses were higher by 27% and 22%, respectively, majorly due to higher lease liabilities. Other income was higher by 65%, out of which forex gain increase was 41%. Higher revenue growth coupled with other efficiencies led to a modest PAT growth. In H1 FY25, PAT stood at โน414 cr, up by 6% YoY. Finance costs and depreciation were higher by 4% and 17% respectively on a YoY basis. Additionally, tax expenses were higher by 12% as one of their facilities was out of the SEZ unit leading to higher tax rate, slightly offset by tax credits of โน19 cr. Other income was higher by 76% YoY leading to sustained profitability, due to UK R&D credits of ~โน14 cr. Additionally, interest on certain tax refund orders amounting to โน14 cr also led to higher other income.
In FY24, PAT was up by 5% to โน792 cr. Finance costs and depreciation expenses were higher by 27% and 22%, respectively, majorly due to higher lease liabilities. Other income was higher by 65%, out of which forex gain increase was 41%. Higher revenue growth coupled with other efficiencies led to a modest PAT growth. In H1 FY25, PAT stood at โน414 cr, up by 6% YoY. Finance costs and depreciation were higher by 4% and 17% respectively on a YoY basis. Additionally, tax expenses were higher by 12% as one of their facilities was out of the SEZ unit leading to higher tax rate, slightly offset by tax credits of โน19 cr. Other income was higher by 76% YoY leading to sustained profitability, due to UK R&D credits of ~โน14 cr. Additionally, interest on certain tax refund orders amounting to โน14 cr also led to higher other income.
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#EBITDA #MARGIN
EBITDA margin in FY24 was 29.5% as compared to 30.6% in FY23. Cross currency headwinds led to impact of 30 bps on the margins, higher investment towards workforce impacted margins by 80 bps and 10 bps impact due to other headwinds. These were marginally offset by 10 bps of optimised cost of sales. The margin in H1 FY25 was 27.6% as compared to 29.7% in H1 FY24. Margins have been lower despite reduced onsite presence, operational efficiency and other positive factors due to salary increments, oneoffs and higher cost of tools & hardware on account of a large deal ramp up.
EBITDA margin in FY24 was 29.5% as compared to 30.6% in FY23. Cross currency headwinds led to impact of 30 bps on the margins, higher investment towards workforce impacted margins by 80 bps and 10 bps impact due to other headwinds. These were marginally offset by 10 bps of optimised cost of sales. The margin in H1 FY25 was 27.6% as compared to 29.7% in H1 FY24. Margins have been lower despite reduced onsite presence, operational efficiency and other positive factors due to salary increments, oneoffs and higher cost of tools & hardware on account of a large deal ramp up.
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#PAT #MARGIN
The margin was 22.3% as compared to 24% in FY23. Lower margins were due to the impact of higher costs and higher tax expenses on the back of the SEZ benefits being lapsed. However, modest revenue growth as well as higher forex gain helped sustain margins at the average level. The PAT margin was ~22% in H1 FY25, down by 47 bps YoY. Modest profit growth on account of higher costs along with slower albeit stable revenue growth have led to a contraction in margins.
The margin was 22.3% as compared to 24% in FY23. Lower margins were due to the impact of higher costs and higher tax expenses on the back of the SEZ benefits being lapsed. However, modest revenue growth as well as higher forex gain helped sustain margins at the average level. The PAT margin was ~22% in H1 FY25, down by 47 bps YoY. Modest profit growth on account of higher costs along with slower albeit stable revenue growth have led to a contraction in margins.
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#COMPANY #POTENTIAL
โข Geopolitical risks and foreign exchange rate volatility, coupled with some slowdown in key industries such as automobiles, continue to present challenges for growth in the sector. However, technology and digital spend by customers across verticals are set to increase, providing opportunities for service companies to pivot themselves and engage with customers. โข According to a report published by Deloitte, the global demand for new electric vehicles (EVs) is expected to grow from 2.5 million units in CY20 to 31.1 million by CY30. It is expected that going forward, growth in passenger vehicles would be primarily contributed by EV sales. With an expectation of gradual shift to EV in the coming years, the adoption of automated driving/ advanced driver assistance systems, in-car infotainment systems and other related technologies would also witness strong growth. ~73% of the overall spend. โข According to NASSCOM, revenue from ER&D in India is expected to be $41 billion in 2023, aided by a steady increase in digital ER&D spend. And in 2022-23, Automotive, Telecom and Medical Devices emerged as the top sectors in terms of deals. Tata Elxsi provides Design-Led ER&D services in these key verticals of Transportation, Media & Communications and Healthcare & Medical Devices. โข The global automotive ER&D spend stood at $180 billion (~โน14.8 lakh cr) as of 2022. It is expected to grow by a CAGR of 7% by 2026 to reach $238 billion (โน19.6 lakh cr). The top 20 ER&D spenders like Volkswagen, General Motors, Toyota, etc account for โข In terms of geography for the automotive ER&D spend, Europe has the highest market share (~49%), followed by APAC (38%) and North America (13%) as of 2022. The outsourced automotive ER&D spend market stood at $18-$20 billion during the same period and is expected to grow by a CAGR of ~11% to reach $27-$29 billion by 2026.
After the spurt in streaming and online media market during the pandemic, year 2022 witnessed a decline in the number of subscribers and overall profitability of service providers. The global digital media production software market was $11.4 billion in 2021 and is expected to grow by a CAGR of 13% by 2031 to reach $36 billion. โข On the communication side, according to Grand View Research, the global telecom services market was valued at $1,805 Billion in 2022 and is expected to expand to $2,874 Billion by 2030 at a compound annual growth rate (CAGR) of 6.2%. The advent of 5G and its increasing footprint across the globe is expected to drive growth in this market. 5G captures 6.5% of the total subscribers globally (~8.1 billion subscribers) and it is expected that by 2025, 25% of global subscribers would be on 5G. Telecom players would invest $527 billion between 2022 and 2025 on 5G. โข Post-pandemic, global healthcare has displayed a pressing need to digitize, with digital healthcare and diagnostics emerging as key growth areas for the future. Digital healthcare helps market players and providers in cost control, quick expansion in new markets, derive technology and business benefits of connected-care use cases, and integrate new technologies into platforms to help with real-time diagnosis and consulting. With the advent of Artificial Intelligence (AI) and the prospect of its proliferation in the healthcare market, the possibilities to leverage data and image analysis using AI have increased manifold. According to Grand View Research, the global digital health market size was valued at $211 Billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 18.6% from 2023 to 2030. This reflects the market potential and opportunity for all market players and healthcare providers to leverage design, innovation and emerging technologies like AI to address the growing demand for preventive diagnostics and healthcare across the globe.
โข Geopolitical risks and foreign exchange rate volatility, coupled with some slowdown in key industries such as automobiles, continue to present challenges for growth in the sector. However, technology and digital spend by customers across verticals are set to increase, providing opportunities for service companies to pivot themselves and engage with customers. โข According to a report published by Deloitte, the global demand for new electric vehicles (EVs) is expected to grow from 2.5 million units in CY20 to 31.1 million by CY30. It is expected that going forward, growth in passenger vehicles would be primarily contributed by EV sales. With an expectation of gradual shift to EV in the coming years, the adoption of automated driving/ advanced driver assistance systems, in-car infotainment systems and other related technologies would also witness strong growth. ~73% of the overall spend. โข According to NASSCOM, revenue from ER&D in India is expected to be $41 billion in 2023, aided by a steady increase in digital ER&D spend. And in 2022-23, Automotive, Telecom and Medical Devices emerged as the top sectors in terms of deals. Tata Elxsi provides Design-Led ER&D services in these key verticals of Transportation, Media & Communications and Healthcare & Medical Devices. โข The global automotive ER&D spend stood at $180 billion (~โน14.8 lakh cr) as of 2022. It is expected to grow by a CAGR of 7% by 2026 to reach $238 billion (โน19.6 lakh cr). The top 20 ER&D spenders like Volkswagen, General Motors, Toyota, etc account for โข In terms of geography for the automotive ER&D spend, Europe has the highest market share (~49%), followed by APAC (38%) and North America (13%) as of 2022. The outsourced automotive ER&D spend market stood at $18-$20 billion during the same period and is expected to grow by a CAGR of ~11% to reach $27-$29 billion by 2026.
After the spurt in streaming and online media market during the pandemic, year 2022 witnessed a decline in the number of subscribers and overall profitability of service providers. The global digital media production software market was $11.4 billion in 2021 and is expected to grow by a CAGR of 13% by 2031 to reach $36 billion. โข On the communication side, according to Grand View Research, the global telecom services market was valued at $1,805 Billion in 2022 and is expected to expand to $2,874 Billion by 2030 at a compound annual growth rate (CAGR) of 6.2%. The advent of 5G and its increasing footprint across the globe is expected to drive growth in this market. 5G captures 6.5% of the total subscribers globally (~8.1 billion subscribers) and it is expected that by 2025, 25% of global subscribers would be on 5G. Telecom players would invest $527 billion between 2022 and 2025 on 5G. โข Post-pandemic, global healthcare has displayed a pressing need to digitize, with digital healthcare and diagnostics emerging as key growth areas for the future. Digital healthcare helps market players and providers in cost control, quick expansion in new markets, derive technology and business benefits of connected-care use cases, and integrate new technologies into platforms to help with real-time diagnosis and consulting. With the advent of Artificial Intelligence (AI) and the prospect of its proliferation in the healthcare market, the possibilities to leverage data and image analysis using AI have increased manifold. According to Grand View Research, the global digital health market size was valued at $211 Billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 18.6% from 2023 to 2030. This reflects the market potential and opportunity for all market players and healthcare providers to leverage design, innovation and emerging technologies like AI to address the growing demand for preventive diagnostics and healthcare across the globe.
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#COMPANY #OUTLOOK
โข For FY25, the company remains hopeful of double-digit cc revenue growth on account of stable demand environment, operational efficiency, continued confidence in the design-led engineering capabilities, strategic relationship with key clients, qualitative change in revenues towards OEMs and SDV programs, entries into new operators and marquee healthcare logos, strong deal pipeline and leveraging on opportunities. โข Margins would grow due to higher utilization and other levers at ~28%-29%. โข Moving towards Q3 FY25, they are optimistic of a healthy deal pipeline, continued growth in the transportation business, deal wins and recovery in other key verticals. โข It would continue to hire freshers and laterals. For FY25, ~1,500-2,000 freshers would be hired depending upon the demand scenario while the lateral hiring would completely be on a need basis. โข Going ahead, ~25% of its overall workforce would be AI ready through specialized programs by Q3 FY25. โข The global companies cutting their EV targets would not impact companyโs growth in the near term. They have several bids in pipeline as well as several deals to execute which gives growth visibility for a healthy H2 FY25. โข The Media vertical has bottomed out and the growth would revive from Q3 FY25 onwards. They are in talks with several companies for deal closures. โข The company expects transportation vertical to be a major growth driver for the company in FY25, followed by industrial design business. It foresees a lot more traction in the OEM segment v/s Tier-1 with a healthy pipeline, enabling growth for the company in the upcoming quarters.
They are optimistic regarding the Healthcare vertical going ahead on the back of AI led operations and new capabilities. Their aim is to broaden customer engagements. The headwind from the large customer would stabilize in H2 FY25. โข The focus would be on Top 20 customer growth for a longer-term growth perspective. โข The tax rate would be in similar levels of ~26%-27% for FY25.
โข For FY25, the company remains hopeful of double-digit cc revenue growth on account of stable demand environment, operational efficiency, continued confidence in the design-led engineering capabilities, strategic relationship with key clients, qualitative change in revenues towards OEMs and SDV programs, entries into new operators and marquee healthcare logos, strong deal pipeline and leveraging on opportunities. โข Margins would grow due to higher utilization and other levers at ~28%-29%. โข Moving towards Q3 FY25, they are optimistic of a healthy deal pipeline, continued growth in the transportation business, deal wins and recovery in other key verticals. โข It would continue to hire freshers and laterals. For FY25, ~1,500-2,000 freshers would be hired depending upon the demand scenario while the lateral hiring would completely be on a need basis. โข Going ahead, ~25% of its overall workforce would be AI ready through specialized programs by Q3 FY25. โข The global companies cutting their EV targets would not impact companyโs growth in the near term. They have several bids in pipeline as well as several deals to execute which gives growth visibility for a healthy H2 FY25. โข The Media vertical has bottomed out and the growth would revive from Q3 FY25 onwards. They are in talks with several companies for deal closures. โข The company expects transportation vertical to be a major growth driver for the company in FY25, followed by industrial design business. It foresees a lot more traction in the OEM segment v/s Tier-1 with a healthy pipeline, enabling growth for the company in the upcoming quarters.
They are optimistic regarding the Healthcare vertical going ahead on the back of AI led operations and new capabilities. Their aim is to broaden customer engagements. The headwind from the large customer would stabilize in H2 FY25. โข The focus would be on Top 20 customer growth for a longer-term growth perspective. โข The tax rate would be in similar levels of ~26%-27% for FY25.
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Tata Elxsi Limited 6000-6400
Expected level 8300
Support 5500
Expected level 8300
Support 5500
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Apollo Tyres Company Research Report
Apollo Tyres headquartered in Gurgaon, Haryana, manufactures tyres under the Apollo and Vredestein brands. Vredestein, acquired in 2009 for EUR 40 million, operates a manufacturing unit in Enschede near Amsterdam with an annual capacity of 5.5 million tyres. In FY16, Apollo acquired Reifencom GmbH, a distributor with 37 stores in Germany, for EUR 45.6 million. Apollo Tyres caters to all tyre segments, including truck and bus, light truck, passenger vehicles, two-wheeler, and off-highway. The Vredestein brand serves the premium and luxury segments of the European market, including high-performance German vehicles like Audi and BMW, as well as premium SUV consumers. Vredestein has successfully established itself in the PCR and two-wheeler markets in India and has made inroads into the APMEA (Asia Pacific, Middle East & Africa) markets. Apollo Tyres has seven manufacturing locations across India and Europe. In Europe, the company largely operates in the replacement market in passenger vehicle (PV) , agriculture, industrial, truck and bicycle segments, even as it continues to make inroads into the OEM (original equipment manufacturer) segment in PV and agriculture. The company has 7,250 dealers in India and in Europe it has 6,500 dealers. Its OEM partnerships include Volvo, Audi, Bentley, Mercedes Benz, M&M, Hyundai, Volkswagen, Toyota, etc. Total production capacity stands at 6,82,366 MT. In Limda (Gujarat) its production is catering to categories such as passenger car radial (PCR), Truck Bias, Light Truck, OTR (off the road tyre) and two wheelers, in Chennai its production was towards PCR, truck bus radial (TBR), light truck radial (LTR), in Perambra its production was for Truck Bias and Light Truck Bias, OHT, in Kalamssery the production was towards Light Truck, Truck Bias, OHT, and it has one more manufacturing unit in Chinnapanduru. Hungaryโs production was for PCR and TBR and Enschedeโs capacity caters to PCR, OHT, Space Master).
Apollo Tyres headquartered in Gurgaon, Haryana, manufactures tyres under the Apollo and Vredestein brands. Vredestein, acquired in 2009 for EUR 40 million, operates a manufacturing unit in Enschede near Amsterdam with an annual capacity of 5.5 million tyres. In FY16, Apollo acquired Reifencom GmbH, a distributor with 37 stores in Germany, for EUR 45.6 million. Apollo Tyres caters to all tyre segments, including truck and bus, light truck, passenger vehicles, two-wheeler, and off-highway. The Vredestein brand serves the premium and luxury segments of the European market, including high-performance German vehicles like Audi and BMW, as well as premium SUV consumers. Vredestein has successfully established itself in the PCR and two-wheeler markets in India and has made inroads into the APMEA (Asia Pacific, Middle East & Africa) markets. Apollo Tyres has seven manufacturing locations across India and Europe. In Europe, the company largely operates in the replacement market in passenger vehicle (PV) , agriculture, industrial, truck and bicycle segments, even as it continues to make inroads into the OEM (original equipment manufacturer) segment in PV and agriculture. The company has 7,250 dealers in India and in Europe it has 6,500 dealers. Its OEM partnerships include Volvo, Audi, Bentley, Mercedes Benz, M&M, Hyundai, Volkswagen, Toyota, etc. Total production capacity stands at 6,82,366 MT. In Limda (Gujarat) its production is catering to categories such as passenger car radial (PCR), Truck Bias, Light Truck, OTR (off the road tyre) and two wheelers, in Chennai its production was towards PCR, truck bus radial (TBR), light truck radial (LTR), in Perambra its production was for Truck Bias and Light Truck Bias, OHT, in Kalamssery the production was towards Light Truck, Truck Bias, OHT, and it has one more manufacturing unit in Chinnapanduru. Hungaryโs production was for PCR and TBR and Enschedeโs capacity caters to PCR, OHT, Space Master).
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#SALES #GROWTH 5 Year CAGR 7.7%
In FY24, the net sales was โน25,378 cr and increased by 3.3% YoY. In India, growth was led by exports and replacement segment and OEM category remained subdued. While in Europe, the PCLT (Passenger car & light truck) performance was sluggish the ultra high performance tyre and all season tyre in replacement category observed growth and therein the company gained market share as well. In the coming year, strong growth is anticipated in Europe markets and Indian markets. In H1 FY25, the net sales was โน12,772 cr and grew by 2% YoY. Its India business grew by 3% YoY to โน9,280 cr (OEM segment remained flat while the replacement segment observed steady growth), Europe business by 2% (in the passenger car segment) and others (Americas and other corporate entities) by 22% YoY.
In FY24, the net sales was โน25,378 cr and increased by 3.3% YoY. In India, growth was led by exports and replacement segment and OEM category remained subdued. While in Europe, the PCLT (Passenger car & light truck) performance was sluggish the ultra high performance tyre and all season tyre in replacement category observed growth and therein the company gained market share as well. In the coming year, strong growth is anticipated in Europe markets and Indian markets. In H1 FY25, the net sales was โน12,772 cr and grew by 2% YoY. Its India business grew by 3% YoY to โน9,280 cr (OEM segment remained flat while the replacement segment observed steady growth), Europe business by 2% (in the passenger car segment) and others (Americas and other corporate entities) by 22% YoY.
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#EBITDA #GROWTH 5 Year CAGR 17.8%
In FY24, the EBITDA saw an increase of 34% YoY to โน4,447 cr. The increase can be attributed to softening of raw material cost, better product mix (premiumisation) and cost control initiatives in India as well as Europe. The raw material price basket was flattish between Q3 and Q4 FY24, respectively. Natural rubber price was at โน163/kg, synthetic rubber โน155/kg and carbon black at โน120/kg in Q4 FY24. In H1 FY25, the EBITDA was โน1,787 cr and de-grew by 19% YoY. This can be attributed to elevated natural rubber prices and freight cost. Alongside, there was an increase in employee cost because of salary increments, etc.
In FY24, the EBITDA saw an increase of 34% YoY to โน4,447 cr. The increase can be attributed to softening of raw material cost, better product mix (premiumisation) and cost control initiatives in India as well as Europe. The raw material price basket was flattish between Q3 and Q4 FY24, respectively. Natural rubber price was at โน163/kg, synthetic rubber โน155/kg and carbon black at โน120/kg in Q4 FY24. In H1 FY25, the EBITDA was โน1,787 cr and de-grew by 19% YoY. This can be attributed to elevated natural rubber prices and freight cost. Alongside, there was an increase in employee cost because of salary increments, etc.
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#PAT #GROWTH 5 Year CAGR 20.4%
In FY24, the net profit stood at โน1,722 cr and grew by 65% YoY. The rise was on account of rise in other income, decline in finance cost and stable depreciation cost. The deferred tax stood at โน398 cr v/s โน131 cr in FY23. This is attributed to MAT Credit and on account of this the tax rate increased to 32% in FY24 v/s ~22% in FY23. It shall switch to new tax regime once its MAT (minimum alternate tax) credits are exhausted. In H1 FY25, the net profit was โน599 cr and declined by 31% YoY mostly on account of operating profits and higher depreciation expenses.
In FY24, the net profit stood at โน1,722 cr and grew by 65% YoY. The rise was on account of rise in other income, decline in finance cost and stable depreciation cost. The deferred tax stood at โน398 cr v/s โน131 cr in FY23. This is attributed to MAT Credit and on account of this the tax rate increased to 32% in FY24 v/s ~22% in FY23. It shall switch to new tax regime once its MAT (minimum alternate tax) credits are exhausted. In H1 FY25, the net profit was โน599 cr and declined by 31% YoY mostly on account of operating profits and higher depreciation expenses.
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#EBITDA #MARGIN
In FY24, the EBITDA margin rose to 17.5% on account of softening of raw material cost, better product mix and cost control measures. This increase was despite ERP provision that the company undertook for the year. The company plans to offset the impact of EPR liability by implementing price increases, which were announced in May at ~3%. This price adjustment effectively counters the EPR costs and partially mitigates the impact of raw material price hikes. 40%-50% of raw materials being imported, Apollo is vulnerable to forex rate fluctuations. In H1 FY25, the EBITDA margin was 14% and declined by ~367 bps YoY. This was mostly on account of increase in raw material cost, employee cost, freight cost, etc. It undertook price hike in the quarter and expects to take further price hikes in the coming quarters.
In FY24, the EBITDA margin rose to 17.5% on account of softening of raw material cost, better product mix and cost control measures. This increase was despite ERP provision that the company undertook for the year. The company plans to offset the impact of EPR liability by implementing price increases, which were announced in May at ~3%. This price adjustment effectively counters the EPR costs and partially mitigates the impact of raw material price hikes. 40%-50% of raw materials being imported, Apollo is vulnerable to forex rate fluctuations. In H1 FY25, the EBITDA margin was 14% and declined by ~367 bps YoY. This was mostly on account of increase in raw material cost, employee cost, freight cost, etc. It undertook price hike in the quarter and expects to take further price hikes in the coming quarters.
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#ROCE
There was an increase in ROCE on a YoY basis in FY24. This was mainly due to the lower capex, coupled with better operating profitability. India's overall capacity utilization is ~75%, with PCR (Passenger Car Radial) utilization at ~80% and TBR (Truck and Bus Radial) utilization at ~70%. A modest capacity expansion for the PCR category is anticipated in the second half of FY25. The company is leveraging productivity tools such as AI (artificial intelligence) and machine learning across all its PCR plants. It expects to see a notable 10%-15% increase in productivity from the existing equipment in these plants as a result of these technological enhancements.
There was an increase in ROCE on a YoY basis in FY24. This was mainly due to the lower capex, coupled with better operating profitability. India's overall capacity utilization is ~75%, with PCR (Passenger Car Radial) utilization at ~80% and TBR (Truck and Bus Radial) utilization at ~70%. A modest capacity expansion for the PCR category is anticipated in the second half of FY25. The company is leveraging productivity tools such as AI (artificial intelligence) and machine learning across all its PCR plants. It expects to see a notable 10%-15% increase in productivity from the existing equipment in these plants as a result of these technological enhancements.
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#COMPANY #POTENTIAL
โข Currently, the growing demand for tyres is driven by increased automobile production and rising export activities of vehicles like tractors, buses, heavy trucks, and cars. This trend is a key factor supporting market growth in India. Additionally, higher income levels are boosting car and two-wheeler sales, creating a favorable market outlook. The demand for vehicles in rural areas is also on the rise. Operating margins are expected to moderate from the elevated levels of FY2024, given the increasing raw material costs. โข India's tyre exports were significantly impacted by falling demand due to the slowdown in advanced economies, geopolitical uncertainties, and inflationary pressures, particularly in the first half of FY24. However, the tyre industry witnessed a substantial recovery in the second half of FY24, with total exports nearly matching the previous year's figures, amounting to approximately โน23,000 cr. Conversely, tyre imports in India increased by approximately 19% in FY24. Tyres worth over โน2,500 cr were imported during this period, benefiting from the low duty rates under Free Trade Agreements (FTAs) signed by the country. โข Domestic tyre demand is expected to grow at 4%-6% in FY25, driven by growth in replacement volumes and OEM segments such as PVs and 2Ws. (Source: ICRA) โข New capacity expansion plans are expected to pause due to weak global demand, muted growth in replacements, and existing headroom in available capacities. Technology continues to revolutionize the tyre industry. In 2024, the integration of AI, predictive analytics, and IoT in manufacturing will advance further. Smart tyres with real-time monitoring capabilities will enhance both safety and performance. โข The global tyre industry is predominantly led by China, followed by Europe, the USA, India, and Japan. There is an ongoing shift towards electrification, supported by nations worldwide. Car manufacturers have committed to phasing out internal combustion CASE STUDY engines as early as 2035
โข Currently, the growing demand for tyres is driven by increased automobile production and rising export activities of vehicles like tractors, buses, heavy trucks, and cars. This trend is a key factor supporting market growth in India. Additionally, higher income levels are boosting car and two-wheeler sales, creating a favorable market outlook. The demand for vehicles in rural areas is also on the rise. Operating margins are expected to moderate from the elevated levels of FY2024, given the increasing raw material costs. โข India's tyre exports were significantly impacted by falling demand due to the slowdown in advanced economies, geopolitical uncertainties, and inflationary pressures, particularly in the first half of FY24. However, the tyre industry witnessed a substantial recovery in the second half of FY24, with total exports nearly matching the previous year's figures, amounting to approximately โน23,000 cr. Conversely, tyre imports in India increased by approximately 19% in FY24. Tyres worth over โน2,500 cr were imported during this period, benefiting from the low duty rates under Free Trade Agreements (FTAs) signed by the country. โข Domestic tyre demand is expected to grow at 4%-6% in FY25, driven by growth in replacement volumes and OEM segments such as PVs and 2Ws. (Source: ICRA) โข New capacity expansion plans are expected to pause due to weak global demand, muted growth in replacements, and existing headroom in available capacities. Technology continues to revolutionize the tyre industry. In 2024, the integration of AI, predictive analytics, and IoT in manufacturing will advance further. Smart tyres with real-time monitoring capabilities will enhance both safety and performance. โข The global tyre industry is predominantly led by China, followed by Europe, the USA, India, and Japan. There is an ongoing shift towards electrification, supported by nations worldwide. Car manufacturers have committed to phasing out internal combustion CASE STUDY engines as early as 2035
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#FUTURE #PLAN
โข The company plans to establish 50 exclusive Vredestein outlets by the end of FY26. These stores will cater to high-end premium customers, providing them with a unique and distinct experience. Vredestein is expected to achieve high-double-digit growth over the next three years. โข It secured additional model wins in both India and Europe from a marquee German PV (passenger vehicle) manufacturer. This shall support the companyโs premiumization journey. โข The company continued to leverage new age technology to improve the process. It recently went live with the end-to-end supply chain digitization in India. This shall boost the demand-supply planning, product availability and optimise inventory.
โข The company plans to establish 50 exclusive Vredestein outlets by the end of FY26. These stores will cater to high-end premium customers, providing them with a unique and distinct experience. Vredestein is expected to achieve high-double-digit growth over the next three years. โข It secured additional model wins in both India and Europe from a marquee German PV (passenger vehicle) manufacturer. This shall support the companyโs premiumization journey. โข The company continued to leverage new age technology to improve the process. It recently went live with the end-to-end supply chain digitization in India. This shall boost the demand-supply planning, product availability and optimise inventory.
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