MarketsMOJO Downgrades Apollo Tyres to 'Sell' Due to Negative Results and Underperformance

Apollo Tyres, a leading player in the tyre and allied industry, has recently been downgraded to 'Sell' by MarketsMOJO. This decision was based on the company's negative results in the quarter ending June 2024. The company's Profit After Tax (Q) has fallen by 25.4% to Rs 330.83 crore, while its DPR (Y) has reached its lowest at 22.13%. Additionally, the PBDIT (Q) has also hit its lowest at Rs 909.25 crore.
In the last year, Apollo Tyres has underperformed the market, generating a return of only 15.39% compared to the market's 30.30% (BSE 500). This is a significant factor in the decision to downgrade the stock to 'Sell'.

While the company has shown healthy long-term growth with an annual rate of 23.08% in operating profit, the technical trend is currently sideways, indicating no clear price momentum. The stock's technical trend has deteriorated from mildly bullish on 11-Nov-24 and has generated a negative return of -1.5% since then.

However, there are some positive aspects to consider. 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 average historical valuations. Additionally, in the past year, while the stock has generated a return of 15.39%, its profits have risen by 33.7%, resulting in a PEG ratio of 0.5.

It is also worth noting that the company has a high institutional holding of 41.68%. These investors have better capability and resources to analyze the fundamentals of companies, making their stake increase by 0.52% over the previous quarter a positive sign.

In conclusion, while Apollo Tyres has shown healthy long-term growth and has a high institutional holding, the recent negative results and underperformance in the market have led to its downgrade to 'Sell' by MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.