 "Apollo Tyres rallies 6% after over 3% equity changes hands via block deals")
Shares of Apollo Tyres rallied 6 per cent to Rs 510 on the BSE in Wednesday's intraday trade after over 3 per cent of the total equity of the tyre maker changed hands on the exchange via block deals.
As many as 22.5 million equity shares, representing 3.55 per cent equity of Apollo Tyres, changed hands on the BSE, exchange data shows. The names of the buyers and sellers, however, could not be ascertained immediately.
At 09:21 AM, Apollo Tyres stock price was 4.4 per cent higher at Rs 503.10, as compared to 0.10 per cent rise in the S&P BSE Sensex.
According to reports, private equity (PE) firm Warburg Pincus was looking to sell 3.5 per cent stake in Apollo Tyres via bulk-block deal mechanism on the Indian stock exchanges today.
The floor price for the deal was pegged at around Rs 463 per share, a discount of 4 per cent to Tuesday's closing price of Rs 482.15 per share. Total stake sale was valued at Rs 1,050 crore.
The floor price for the deal was pegged at around Rs 463 per share, a discount of 4 per cent to Tuesday's closing price of Rs 482.15 per share. Total stake sale was valued at Rs 1,050 crore.
The PE firm had already sold 4.5 per cent stake in the company a couple of quarters back and, with this stake sale, its holding in the company will reduce to zero, ICICI Securities said in a note.
Meanwhile, Apollo Tyres' March quarter (Q4FY24) consolidated revenue was flat year-on-year (Y-o-Y) and down 5 per cent quarter-on-quarter (Q-o-Q) to Rs 6,260 crore, due to weak Europe and India revenue. Consolidated Ebitda margin dipped 190bp Q-o-Q to 16.4 per cent.
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The management expects demand momentum to pick up post general elections. The company will continue to focus on business fundamentals, cost control, and free cash flow generation, the management said.
Analysts at Elara Capital believe FY24 will post peak margin for Apollo Tyres and the tyre sector. The likelihood of earnings downgrades going forward are higher for the tyre sector with cost pressures looming which will restrict PAT CAGR for the sector to single digits over FY24-27E; thereby restricting further multiple upgrades.
The brokerage firm expects margin to dip from 17.5 per cent in FY24 to 16.7 per cent in FY25E and 16.9 per cent in FY26E, given bottoming of raw material cost, increased competition and factoring in the impact of the EPR regulation.