The company witnessed moderate rise in margins. Rising interest and depreciation charges coupled with big jump in tax provision truncated the bottomlinegrowth to a large extent. At the PBT level, the company registered 29% rise in profits.

Commenting on the results, Onkar S Kanwar, Chairman, Apollo Tyres Ltd, said, "This is an impressive performance by the company, with each of the key operations witnessing a healthy volume growth across product segments. Shortage of a key raw material, and the increasing cost of crude-based raw materials, did pose challenges for us. The raw material prices, as a basket, went up by more than 10% in the past fiscal. This cost push is likely to continue going forward as well, putting pressure on our margins. On the positive side, considering our capacity expansions in India and Europe, we are looking forward to a healthy growth in our topline."

Both, Indian and European Operations, continued with their growth momentum and registered a revenue growth upwards of 20% in the last quarter of the financial year 2017-18, led by a strong performance in the commercial vehicle segment, especially truck radials, in India, and passenger vehicle category in Europe.

Quarterly Performance

The company witnessed decrease in the raw material cost(inclusive of purchase of stock in trade) during fourth quarter ended Mar 2018. The raw material cost as % of sales net of stock adjustments fell rose230 bps to 54.9%. The employee cost rose 150bps to 14.9% in Q4 FY 17-18. Other expenses fell 100 bps to 17.4%. Resultantly, operating margins rose 160bps 12.8%. Operating profit rose 39% to Rs 515.2crore on a y-o-y basis.

Average natural rubber (NR) prices which is the key input cost dropped on yoy basis during the quarter ended March 2018. Prices were almost 18% lower over the year and averaged around Rs 125/Kg vis a vis Rs 151/Kg a year ago in Jan-Mar 2017 period. This along with decrease in other cost components helped Apollo Tyres in improving its margins.

With 10% drop in other income to Rs 43.72crore, PBIDT rose 33% to Rs 558.92crore. Interest cost rose 92%to Rs 47.6 crore. Depreciation cost increased 29% at Rs 176.81crore. Thus, PBT registered 29% riseto Rs 334.51 crore. After considering 1350 bps increase in the effective tax rate at around 25.22% and 179% rise in tax provision, PAT rose 10% at Rs 250.13 crore.

During the quarter, the company earned 59% and 25% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas)respectively. Revenues from APMEA rose 7%. EA registered 22% rise in revenues. The other segment comprising of other business entities which constitutes 16% of overall revenues, registered 60% rise in income.

At the segment front, APEMA business witnessed 50% rise in PBIT at Rs 344crore and constituted 89% of the total segment profit. Segment profit of EA operations fell 48% to Rs 19.99 crore and constituted 5% of segment profit. Profit from other segment stood at Rs24.69 crore, rise of 58%.

Full YearPerformance

For the year ended March 2018, net sales witnessed a growth of 13%, as compared to the last fiscal, to close at Rs 14840 crores; net profit reported for the full year of FY18 was Rs 724 crores, drop of 34%.

The company witnessed increase in the raw material cost (inclusive of purchase of stock in trade) forFY18. The raw material cost as % of sales net of stock adjustments rose 388 bps to 56.9%. The employee cost rose 2 bps to 14.8% in FY 17-18. Other expenses fell 120 bps to 17.5%. Resultantly, operating margins slipped 290 bps 11.9%. Operating profit fell 11% to Rs 1651crore on a y-o-y basis.

With 23% drop in other income to Rs 116.53crore, PBIDT fell 12% to Rs 1767.8crore. Interest cost rose 58% to Rs 163 crore. Depreciation cost increased 28% at Rs 592.55 crore. Thus, PBT registered 29% drop to Rs 1012 crore. After considering 505 bps increase in the effective tax rate at around 28.49% and 14% drop in tax provision, PAT fell 34% at Rs 723.88 crore.

During FY17-18, the company earned 59% and 25% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas) respectively. Revenues from APMEA rose 6%. EA registered 8% rise in revenues. The other segment comprising of other business entities which constitutes 15% of overall revenues, registered 87% rise in income.

At the segment front, APEMA business witnessed 16% drop in PBIT at Rs 986.38 crore and constituted 82% of the total segment profit. Segment profit of EA operations fell 61% to Rs 119.73 crore and constituted 10% of segment profit. Profit from other segment stood at Rs95.37 crore, rise of 132%.

The stocks closed 1.8% lower around Rs 278.95 at BSE on 11 May 2018, the following day after earnings were announced.