The company witnessed big drop in margins. Rising interest and depreciation charges truncated the bottomline further.

Quarterly Performance

The company witnessed increase in the raw material cost(inclusive of purchase of stock in trade) duringthird quarter ended Dec 2017. The raw material cost as % of sales net of stock adjustments rose240 bps to 55.1%. The employee cost fell 40bps to 13.3% in Q3 FY 17-18. Other expenses fell 10 bps to 19.13%. Resultantly, operating margins slipped 210 bps 12.3%. Operating profit fell 1% to Rs496.33crore on a y-o-y basis.

Average natural rubber (NR) prices which is the key input cost being remained flat on yoy basis for another successive quarter, (up marginally 0.5% to Rs 132/kg) during the Oct-Dec 17 quarter. Despite this, Apollo Tyre's margins dropped.

With 25% rise in other income to Rs46.37 crore, PBIDT rose 1% to Rs542.7 crore. Interest cost rose 45%to Rs41.04 crore. Depreciation cost increased 33% at Rs151.39crore. Thus, PBT before EO registered 11% dropto Rs350.27 crore. After considering 490 bps increase in the effective tax rate at around 29.99% and 6% rise in tax provision, PAT fell 17% at Rs245.24 crore.

During the quarter, the company earned 57% and 29% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas)respectively. Revenues from APMEA rose 8%. EA registered 11% rise in revenues. The other segment comprising of other business entities which constitutes 14% of overall revenues, registered 104% rise in income.

At the segment front, APEMA business witnessed 13% rise in PBIT at Rs316.86crore and constituted 80% of the total segment profit. Segment profit of EA operations fell 56% to Rs57.18 crore and constituted 14% of segment profit. Profit from other segment stood at Rs22.89 crore, rise of 127%.

Nine Month Performance

For the nine months ended Dec 17, the company's topline grew 10% to Rs 10,809.21 crore. The company witnessed increase in the raw material cost (inclusive of purchase of stock in trade) fornine months ended Dec 2017. The raw material cost as % of sales net of stock adjustments rose600 bps to 57.7%. The employee cost fell 50 bps to 13.46% in 9M FY 17-18. Other expenses fell 120 bps to 18.3%. Resultantly, operating margins slipped 450 bps 10.5%. Operating profit fell 23% to Rs1136.09crore on a y-o-y basis.

With 29% drop in other income to Rs72.82crore, PBIDT fell 24% to Rs1208.9crore. Interest cost rose 48% to Rs115.31 crore. Depreciation cost increased 28% at Rs415.73 crore. Thus, PBT before EO registered 42% drop to Rs677.87 crore. After considering 410 bps increase in the effective tax rate at around 30.1% and 33% drop in tax provision, PAT fell 46% at Rs473.81 crore.

During the nine-month period, the company earned 59% and 26% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas) respectively. Revenues from APMEA rose 5%. EA registered 4% rise in revenues. The other segment comprising of other business entities which constitutes 15% of overall revenues, registered 100% rise in income.

At the segment front, APEMA business witnessed 32% drop in PBIT at Rs642.31 crore and constituted 79% of the total segment profit. Segment profit of EA operations fell 63% to Rs99.73 crore and constituted 12% of segment profit. Profit from other segment stood at Rs 70.68 crore, rise of 177%.

The stocks is trading around Rs 260 at BSE currently.