APOLLO TYRES LTD- Q3 FY17 (Consolidated) APOLLO TYRES Ltd rebounded with double digit revenue growth in December quarter along with both PAT & EBDITA exhibiting positive growth. After a lackluster September quarter, Income from Operations or Revenue grew 16% YOY and 12% sequentially at Rs. 37037 Mn in the current December quarter. EBDITA followed with the same sequential growth but with a lower yearly growth rate of 3%. EBDITA was reported at Rs. 5367 Mn compared to Rs. 5193 Mn corresponding quarter previous year. Rising rubber prices, crude and addition of Reifencom having  lower margins impacted company’s overall yearly EBDITA margins in the current quarter.  Reifencom revenue for the quarter is about €65 million. PAT was seen at Rs. 2957 Mn against Rs. 2790 Mn corresponding period previous year rising 6% YOY with quarterly growth of 14% in the current December quarter.  Other Income jumped 4 times and was reported at Rs 373 Mn against Rs. 105 Mn same quarter previous year strengthening the company’s bottom-line. High operating cost rising 18% YOY dented Net Profit & EBDITA Margins which stood at 7.98% & 14.49% in the current December quarter. Both margins were under pressure yearly but QOQ, Net Profit & EBDITA Margin improved 15 & 8 basis points respectively. One basis point is 1/100th of a percentage. With respect to geographical segmentation of revenue, Europe & Americas increased 54% YOY contributing 31% of total revenues followed by Other geographies jumping 48% & APMEA at a dismal growth of 2% on yearly basis in the current Q3 FY17.  The truck tyres contribute 43%, passenger car tyres 40% of total revenues and the balance by light truck, farm and other categories. Apollo Tyres Ltd with market cap of Rs 93202 Mn is a major player in commercial vehicle, passenger vehicle, off-road and two wheeler tyres and is a well positioned global Indian brand. The company witnessed strong growth in OEM, passenger car, truck & bus segments YOY whereas commercial segment exhibited de-growth. Demonetization did not impact much but it did reduce Chinese imports helping the Indian tyre industry as a whole. The company has performed well in-spite of high raw material prices & crude which impacted its margins in the current quarter. Raw material prices are expected to move northwards in the coming quarters and thus the company needs to undertake price increase of about 6-7% to defend its margins. We recommend BUY for the stock for medium & long term investment with PE multiple of 7.79 x FY17E & 7.13 x FY18E with a target price of Rs. 285. 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