Key Points from the discussion:

Apollo Tyres reported 72% decline in its consolidated net profit at Rs 88.3 crore for the quarter ended June 2017. Its total income from operations was down 1% at Rs 3282 crore during the quarter.

Revenues came in lower mainly as domestic business witnessed 4%volume de-growth mainly impacted by transition to BS IV norms & implementation of GST and as currency fluctuations impacted Europeanoperations.

In Q1FY18 truck volumes declined ~10% (mainly due to transition from BS III to BS IV norms) while passenger vehicle volumes witnessed marginal growth in India operations.

The replacement segment was impacted as dealer liquidated the stock ahead of implementation of GST.

The company is hopeful of positive volume growth in sales to truck segment for whole year.

The management expects the benefit of low cost inventory to come in from Q2FY18 onwards thus supporting margins.

Management expects raw material prices todeclineby mid to high single digits on qoq basis in Q2FY18. Company expects raw material prices to remain flattish in H2 FY 18.

Average landed cost for raw material for Q1FY18 stood at Rs170/kg for natural rubber, synthetic rubber atRs 170/kg, fabric Rs 300/kg and carbon black was atRs65/kg.

The management is positive on the demand outlook, going forward. The re-stocking of the tyre inventory by dealer (post GST) will further boost replacement demand while it expects the OEM segment to recovergradually.

In India operations, revenue grew 1% yoy in Q1FY18; after volume declined 4% but value (price) grew 5% in Q1FY18.

Its core European operations revenue fell 3% yoy as currency fluctuation impactedoverall performance.

The management believes though thequantum of Chinese TBR has reduced (from high of 155,000/month in thepast) due to demonetisation; the TBR import still are at high level ofof around 100,000/month & can go down <70,000/month with the imposition of anti dumpingduty.

Imposition of anti-dumping duty will narrow the price gap between the Chinese & Indian TBR tyres by 10-12%.

The start-up cost of its Hungary plant & truck radial sale will exert some pressure on margins in European operations.