Rerating The Next Step For Apollo Tyres

Looking at the quarterly numbers at the first quarter between 2017 and 2018, it turns out to be weak but analysts are in high expectations that the condition for the next quarters will be a lot better for Apollo Tyres. Sales of the tyres on the Gold Coast are expected to increase as well. This is due to the fact that tyre dealers in India have begun to restock the brand after they were forced to destock in the first quarter. The destocking was because of the GST implementation which started on the 1st of July.

Auto sales have also begun restocking which gives them hope to have better sales in their OEM or Original Equipment Manufacturer department. It is also expected to see an increase in demand for replacement because of the good monsoon of 2017. Around 69 per cent of the domestic demand in the country is coming from replacement demand.

There are various positive factors that affect the tyre industry at the moment including moderation in prices and decrease in the prices of natural rubbers. These two alone comprise 60 per cent of the input cost. The prices of natural rubbers have also decreased by 45 per cent in the global market. The peak price was in February art Rs 194 and now it is down to Rs 107.

The prices of the natural rubber coming from domestic companies have been affected because tyre manufacturers are given the opportunity to import natural rubber without the burden of import duties. The industry of tyres in India is eventually taking the radial path and Apollo will be benefit greatly from this. The company is now on their way to improve their radial capacity and they will begin at their radial plant located in Chennai with a target of 50 per cent increase.

Recently, the government decided to put anti-dumping fees on radial tyres for buses and trucks that were manufactured in China. This is to help the domestic companies as they are trying to recover from their losses. Meanwhile, the sales of tyres on the Gold Coast are increasing because of the high demand.