MarketsMOJO Downgrades Apollo Tyres to 'Sell' Despite Long-Term Growth Potential

Apollo Tyres, a leading player in the tyre and allied industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade comes after the company reported negative results in the quarter ending June 2024. The company's PAT (Q) has fallen by 25.4%, with a DPR (Y) of only 22.13%. Additionally, the PBDIT (Q) has also decreased to Rs 909.25 crore, the lowest in recent times.
Despite these negative results, Apollo Tyres has shown healthy long-term growth with an annual operating profit growth rate of 15.30%. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. This trend has worsened since October 7, 2024, when it was mildly bullish, resulting in a -1.96% return.

On the positive side, Apollo Tyres has an attractive valuation with a ROCE of 17.1 and an enterprise value to capital employed ratio of 2. The stock is currently trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 31.83%, while its profits have increased by 33.7%. This gives the company a PEG ratio of 0.6, indicating a potential undervaluation.

It is worth noting that Apollo Tyres has a high institutional holding of 41.16%. This suggests that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors. Overall, while Apollo Tyres may have faced some challenges in the recent quarter, its long-term growth potential and attractive valuation make it a stock worth considering for investors.