By Oliver Hall
Apollo tyres has surprised the industry by posting a sharp rise in its net profit during the September 2009 quarter.
The Indian tyres manufacturer’s net profit rose from Rs 7.8 crore a year ago to Rs 102 crore this year.
The market took a heavy sigh of relief at the resulting rise in the shares of the tyremakers that was up by 5.11% to close at Rs 54.55, its highest in 21 months.
The major factor that aided the company to achieve this top line was the low expenses incurred on the raw materials.
The pull in the prices of rubber and petro-based chemicals – industry’s two crucial inputs resulted in the lower expenses on raw materials. A year ago the raw materials costed around 80.6% of the company’s net sales whereas this year it has been recorded to cost only 58% of the company’s net sales.
On the whole the company has performed exceedingly well in Q2 by reporting Rs 1,220 crore revenues which is 25 % high and an all time operating profits at Rs 200 crore.
Apollo tyres claim to register a double digit growth in the next half year whereby being confident for the Q3 and Q4 to be better that the first half of the year.
To maintain the level it has set for itself the company will be required to sustain the current operating profits. Also the company’s ability to raise the selling prices, the future raw material prices and the growth in the volume will decide the company’s destiny in H2.