3QFY2012 Result Update | Tyre

February 9, 2012

Apollo Tyres
Performance Highlights
Y/E March - Consolidated (` cr) Net sales EBITDA EBITDA margin (%) Adjusted PAT
Source: Company, Angel Research

BUY
CMP Target Price
% chg (yoy) Angel est. 36.3 18.7 (149)bp 5.8 2,900 246 8.5 78 % diff. 11.3 31.6 155bp 63.2

`76 `88
12 Months

3QFY12 3QFY11 3,228 324 10.0 127 2,369 273 11.5 120

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Tyre 3,805 1.2 83/44 478,637 1 17,831 5,412 APLO.BO APTY@IN

Strong consolidated performance: For 3QFY2012, Apollo Tyres (APTY) reported strong net sales growth of 36.3% yoy (12.4% qoq), led by an 18.2% yoy (8.3% qoq) increase in volumes and 15.3% yoy (3.8% qoq) growth in net average realization. Top-line growth was led by strong performance in India, Europe and South Africa, which posted revenue growth of 46.2%, 26.3% and 27.9% yoy, respectively. EBITDA margin expanded by 202bp sequentially to 10%, benefitting from lower raw-material costs and higher profitability in Europe in a seasonally strong quarter. As a result, adjusted net profit grew by 63.8% qoq to `127cr. During the quarter, APTY made a provision of `29cr in relation to a penalty following the settlement agreement with South Africa Competition Commission for its operations in South Africa. Better-than-expected standalone performance, driven by volume growth: APTYs standalone net sales grew strongly by 46.2% yoy (13.5% qoq) to `2,093cr, led by volume growth of 24% yoy (10.2% qoq) and net average realization growth of 17.9% yoy (2.9% qoq). EBITDA margin for the quarter improved by 123bp qoq to 8%, driven by the decline in raw-material expenses; but the benefits were limited due to higher proportion of OEM sales during the quarter. However, net profit grew substantially by 92.9% qoq to `43cr, largely led by improvement in operating margin. Outlook and valuation: We revise upwards our volume estimates for FY2012/13E for standalone entity, driven by better-than-expected volume growth in 3QFY2012 and likely pick-up in demand going ahead. We have also raised our margin expectations to factor in moderation in natural rubber prices. We expect the company to deliver a strong revenue CAGR of 23.7% over FY201113E, led by production ramp-up at Chennai facility and robust growth in European subsidiary. We expect the companys operating margin to improve in FY2013E on account of the gradual softening of raw-material prices. At `76, APTY is trading at attractive levels of 6.9x FY2013E earnings. We maintain our Buy rating on the stock with a target price of `88, valuing it at 8.0x FY2013E earnings.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 46.4 19.7 23.2 10.7

Abs. (%) Sensex Apollo Tyres

3m 2.7 27.2

1yr 1.4

3yr 86.0

62.9 345.4

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010 8,121 62.6 653 369.5 14.6 13.0 5.8 1.9 29.8 29.3 0.6 4.4

FY2011 8,868 9.2 441 (32.5) 11.1 8.7 8.6 1.6 17.0 15.7 0.7 6.2

FY2012E 12,061 36.0 405 (8.0) 9.2 8.0 9.4 1.4 13.5 14.1 0.5 5.7

FY2013E 13,580 12.6 556 37.0 10.2 11.0 6.9 1.2 30.8 16.5 0.5 4.5

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Apollo Tyres | 3QFY2012 Result Update

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) Net sales Consumption of RM (% of sales) Staff costs (% of sales) Purchases of TG (% of sales) Other expenses (% of sales) Total expenditure EBITDA EBITDA margin (%) Interest Depreciation Other Income PBT (excl. extr. Items) Exceptional items PBT (incl. extr. Items) (% of sales) Provision for taxation (% of PBT) Reported PAT PATM (%) Equity capital (cr) EPS (`)
Source: Company, Angel Research

3QFY12 2,093 1,547 73.9 96 4.6 63 3.0 220 10.5 1,926 168 8.0 61 47 0 60 60 2.9 17 28.8 43 2.0 50.4 0.8

3QFY11 1,432 940 65.6 78 5.4 53 3.7 213 14.8 1,283 149 10.4 43 37 3 72 72 5.0 18 24.9 54 3.8 50.4 1.1

% chg 46.2 64.5 22.9 19.9 3.6 50.1 12.6 41 28 (84.0) (16.7) (16.7) (4.0) (21.0)

9MFY12 5,899 4,362 73.9 274 4.6 185 3.1 628 10.7 5,450 449 7.6 166 134 3 152 152 2.6 43 28.2 109 1.8 50.4

9MFY11 3,729 2,434 65.3 232 6.2 112 3.0 564 15.1 3,342 387 10.4 106 109 10 183 183 4.9 51 27.8 132 3.5 50.4 2.6

% chg 58.2 79.2 18.0 65.5 11.4 63.1 16.0 57.7 23.0 (72.4) (16.8) (16.8) (15.6) (17.3)

(21.0)

2.2

(17.3)

Net sales up 46.2% yoy on a 24% yoy increase in volumes: On a standalone basis, APTY registered strong top-line growth of 46.2% yoy to `2,093cr, backed by a robust 24% yoy (10.2% qoq) increase in volumes and a 17.9% (2.9% qoq) increase in net average realization. Product mix continues to favor the OEM segment due to increasing supplies of truck and bus radial (TBR) tyres from Chennai facility. During 3QFY2012, the replacement segment contributed 57% to the companys top line, while contribution of OEM and exports stood at 33% and 10%, respectively.

February 9, 2012

Apollo Tyres | 3QFY2012 Result Update

Exhibit 2: Standalone net sales up 46.2% yoy on 24% volume growth

(`cr) 2,500 2,000 1,500 1,000 500 0 18.2 8.2 (5.0) (3.7) 46.5 34.2
Net sales yoy change (RHS)

74.9 56.9 46.2

(%) 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 (10.0) (20.0)

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Source: Company, Angel Research; Note: Standalone performance

Operating margin improves sequentially to 8%: APTY reported a 123bp yoy expansion in operating margin to 8%, driven largely by easing raw-material cost pressures, primarily natural rubber. While average natural rubber cost declined by 10.8% sequentially, cost of other raw materials such as NTC and carbon black moved up due to INR depreciation. Raw material to net sales ratio witnessed a 100bp contraction sequentially and stood at 73.9%. However, margin growth was restricted due to unfavorable product mix (in favor of OEM).

Exhibit 3: Average raw-material cost trend

Particulars Nylon Tyre Cord Fabric Natural Rubber Carbon Black
Source: Company, Angel Research

3QFY12 223 250 73

3QFY11 225 185 55

% chg (yoy) (0.9) 35.1 32.7

2QFY12 250 235 70

3QFY12

% chg (qoq) (10.8) 6.4 4.3

Exhibit 4: Decline in natural rubber prices...

(`/kg) 250 200 150 100 50 0 141 118 165 177 194 225 229 211

Exhibit 5: ...leads to EBITDA margin improvement

(%) 202 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 15.5 14.1 10.4 10.3 10.4 8.3 8.0 6.8 8.0 64.7 67.8 68.2 67.1 69.3 EBITDA margin Raw material cost/sales 74.3 76.6 77.8 76.9

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Source: Company, Crisil Research, Angel Research

3QFY12

Source: Company, Angel Research; Note: Standalone performance

February 9, 2012

3QFY12

Apollo Tyres | 3QFY2012 Result Update

Standalone net profit increases substantially by 92.9% qoq: Led by strong top-line growth and improvement in operating margin, standalone net profit registered a significant 92.9% qoq jump to `43cr. However, on a yoy basis, it declined by 21% on account of contraction in operating margin and higher interest (up 41% yoy) and depreciation expense (up 28% yoy), led by ramping up of Chennai facility. Exhibit 6: Net profit jumps by 92.9% sequentially
(` cr) 140 120 100 80 60 40 20 0 3.6 3.2 3.8 3.8 2.3 1.2 2.0 7.7 Net profit 8.8 Net profit margin (RHS) (%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Source: Company, Angel Research; Note: Standalone performance

February 9, 2012

3QFY12

Apollo Tyres | 3QFY2012 Result Update

Exhibit 7: Quarterly performance (Consolidated)

Y/E March (` cr) Net sales Consumption of RM (% of sales) Staff costs (% of sales) Purchases of TG (% of sales) Other expenses (% of Sales) Total expenditure EBITDA EBITDA margin (%) Interest Depreciation Other Income PBT (excl. extr. items) Exceptional Items PBT (incl. extr. items) (% of sales) Provision for taxation (% of PBT) Share in loss/(profit) of associates Minority interest Reported PAT Adjusted PAT PATM (%) Equity capital Reported EPS (`) Adjusted EPS (`)
Source: Company, Angel Research

3QFY12 3QFY11 3,228 2,011 62.3 351 10.9 138 4.3 404 12.5 2,904 324 10.0 73 82 3 172 29 143 4.4 44.4 31.1 0 (0) 98 127 3.9 50.4 1.9 2.5 2,369 1,255 53.0 313 13.2 137 5.8 392 16.5 2,096 273 11.5 53 67 5 158 158 6.7 37 23.6 0 0 120 120 5.1 50.4 2.4 2.4

% chg 9MFY12 9MFY11 36.3 60.3 12.3 0.9 3.0 38.6 18.7 38.2 22.3 (34) 9.0 (9.6) 19.3 8,922 5,488 61.5 1,033 11.6 456 5.1 1,150 12.9 8,127 795 8.9 200 235 17 376 29 347 3.9 93 26.8 1 0 (18.6) 5.8 253 282 3.2 50.4 (18.6) 5.8 5.0 5.6 6,138 3,229 52.6 905 14.7 332 5.4 1,015 16.5 5,481 657 10.7 131 198 9 337 337 5.5 89 26.3 0 0 248 248 4.0 50.4 4.9 4.9

% chg 45.3 70.0 14.1 37.3 13.3 48.3 21.0 53.1 18.8 92.1 11.7 3.0 4.7

2.0 13.8

2.0 13.8

Consolidated performance: APTY registered better-than-expected 36.3% yoy (12.4% qoq) growth in its consolidated net revenue to `3,228cr, aided by 18.2% yoy (8.3% qoq) growth in volumes to 130,000MT and 15.3% yoy (3.8% qoq) growth in average net realization. India, Europe and South Africa operations registered strong revenue growth of 46.2% (13.5% qoq), 26.3% (9.4% qoq) and 27.9% yoy (26.8% qoq), respectively, during the quarter. EBITDA margin expanded by 202bp sequentially to 10%, benefitting from lower raw-material costs and higher profitability in Europe in a seasonally strong quarter. Raw-material to net sales ratio stood at 66.6%, posting a decline of 100bp qoq. EBIT margin of the European subsidiary expanded by 513bp qoq to 15.7%, led by superior product and price mix. However, South African subsidiary registered loss of `29.6cr at the EBIT level due to the impact of penalty of ZAR45mn to be paid to South Africa Competition Commission as part of the settlement. Adjusted net profit grew strongly by 63.8% qoq to `127cr. However, on a yoy basis, adjusted net profit reported modest 5.8% yoy growth, largely due to contraction in operating margin (down 149bp yoy) and higher interest expense (up 38.2% to `73cr) during the quarter.
February 9, 2012

Apollo Tyres | 3QFY2012 Result Update

Exhibit 8: Segmental performance

3QFY12 3QFY11 Revenue (` cr) India South Africa Europe Others EBIT (` cr) India South Africa Europe Others EBIT margin (%) India SA Europe
Source: Company, Angel Research

% chg 46.2 27.9 26.3 -

9MFY12 9MFY11 5,899 965 2,172 73 3,729 829 1,611 -

% chg 58.2 16.4 34.8 -

2,093 383 820 35

1,432 300 649 -

121.1 (29.6) 129.0 (2.1)

115.5 7.8 88.3 (0.7)

4.9 46.0 -

318 (32) 267 (4)

288 7 183 2

10.4 46.3 -

5.8 (7.7) 15.7

8.1 2.6 13.6

5.4 (3.3) 12.3

7.7 0.9 11.3

Conference call Key highlights

Management expects softening of rubber prices to boost margins from 4QFY2012 and expects rubber prices to decline gradually going ahead. Natural rubber inventory for the domestic business stands at three weeks, while Europe/South Africa operations have contracts for one quarter. Ramp-up at Chennai facility is on track. Current production is at 275MT/day and is expected to reach 450MT/day by September 2012. APTY does not intend to incur any major capex in FY2013, except for maintenance capex. On a consolidated basis, net debt stood at `2,900cr as of December 2011 (`3,200cr as of September 30, 2011).

February 9, 2012

Apollo Tyres | 3QFY2012 Result Update

Investment arguments
Tyre industry set for a structural shift: Currently, manufacturing radial tyres is far more capital intensive than manufacturing cross-ply tyres. Investment required for radial tyres per tpd is 3.2x that of cross-ply tyres at `6.1cr/tpd. On the other hand, the selling price of radial tyres is ~20% higher than that of cross-ply tyres. Thus, to generate similar RoCE and RoE, tyre companies would need to earn EBITDA margin of ~21% compared to ~9% earned on cross-ply tyres, considering the difference in capital requirements and consequent impact on asset turnover, interest cost and depreciation. Therefore, higher capital requirements will help protect margins from upward-bound input costs, as the business model evolves bearing in mind final RoEs rather than margins. With the sector set for a structural shift and the apparent pricing flexibility, RoCE and RoE of tyre manufacturers are expected to improve going forward. Riding on high domestic demand: The Indian tyre industry is witnessing strong demand from the replacement as well as OEM markets, keeping capacities running at peak. APTY is poised to achieve market leadership on the back of increasing production from 820tpd in FY2010 to ~1,300tpd in FY2012E. Strategic overseas investment offers synergies in the long term: Acquisitions done by the company in the last two-three years are increasingly contributing to its revenue. We estimate Vredestein Banden combined with Dunlop SA to contribute close to 35% to the companys overall consolidated revenue, helping it to further strengthen its foothold in the Indian tyre industry. Acquisitions offer synergies by way of access to radial tyre technology, wider product portfolio and presence in newer geographies.

Outlook and valuation

We revise upwards our volume estimates for FY2012/13E for the standalone entity, driven by better-than-expected volume growth in 3QFY2012 and likely pick-up in demand going ahead. We have also raised our margin expectations to factor in moderation in natural rubber prices.

Exhibit 10: Change in estimates

Y/E March (` cr) Net sales OPM (%) EPS (`) Earlier Estimates FY2012E 11,819 8.9 7.2 FY2013E 13,296 9.4 9.3 Revised Estimates FY2012E 12,061 9.2 8.0 FY2013E 13,580 10.2 11.0 % chg FY2012E 2.0 39bp 11.6 FY2013E 2.1 84 bp 18.8

Source: Company, Angel Research

We remain positive on the tyre industry in view of the structural shift that the industry is witnessing and due to softening raw-material prices, mainly natural rubber. We expect the company to deliver a strong revenue CAGR of 23.7% over FY201113E, led by production ramp-up at Chennai facility and robust growth in European subsidiary. We expect the companys operating margin to improve in FY2013 on gradual softening of raw-material prices.

February 9, 2012

Apollo Tyres | 3QFY2012 Result Update

At `76, APTY is trading at attractive levels of 6.9x FY2013E earnings. We maintain our Buy rating on the stock with a target price of `88, valuing it at 8.0x FY2013E earnings. Key downside risks to our call: A sharp rise in input costs from current levels, slower growth in international business and lower-than-anticipated domestic replacement demand pose downside risks to our estimates.

Exhibit 11: Angel vs. consensus forecast

Angel estimates FY12E Net sales (` cr) EPS (`)
Source: Bloomberg, Angel Research

Consensus FY12E 7.6 FY13E 10.4

Variation (%) FY12E FY13E 2.3 6.0 2.5 6.3

FY13E 11.0

12,061 8.0

13,580 11,790 13,242

Exhibit 12: One-year forward P/E band

(`) 160 140 120 100 80 60 40 20 0 Share Price (`) 2x 5x 8x 11x

Exhibit 13: One-year forward P/E chart

(x) 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 One-yr forward P/E Five-yr average P/E

Dec-07

Jun-11 Jun-11

Mar-06

Apr-10

May-08

Dec-03

Mar-06

Aug-07

Nov-06

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

Exhibit 14: One-year forward EV/EBITDA band

(` cr) 12,000 10,000 8,000 6,000 4,000 2,000 0
Dec-05 Jun-05 Jan-07 Jun-11 Aug-07 Mar-08 Apr-03 Oct-03 Nov-04 Apr-09 Oct-09 May-04 May-10 Nov-10 Sep-08 Jan-12 Jul-06

Exhibit 15: One-year forward EV/EBITDA chart

8.0 (x) 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Feb-09 May-07 Dec-07 Sep-09 Jul-05 Jul-08 Mar-06 Apr-10 Nov-10 Oct-06 Jan-12

EV (`cr)

2.0

4.0

6.0

One-yr forward EV/EBITDA

May-07

Five-yr average EV/EBITDA

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

February 9, 2012

Nov-10

Oct-06

Feb-09

Feb-09

Sep-04

Jun-05

Apr-03

Oct-09

Apr-11

Jan-12

Sep-09

Jan-12

Jul-10

Jul-05

Jul-08

Apollo Tyres | 3QFY2012 Result Update

Exhibit 16: Tyre - Recommendation summary

Company Apollo Tyres* Ceat JK Tyre* Reco. Buy Buy Accumulate CMP (`) 76 90 83 Tgt. price (`) 88 125 89 Upside (%) 16.8 38.9 7.5 P/E (x) FY12E 9.4 (16.0) 7.3 FY13E 6.9 4.3 3.7 EV/EBITDA (x) FY12E 5.7 10.7 7.1 FY13E 4.5 6.2 5.6 RoE (%) FY12E 13.5 (3.1) 5.3 FY13E 30.8 11.2 9.8 FY11-13E EPS CAGR (%) 12.3 60.8 17.7

Source: Company, Angel Research; Note: *Consolidated

February 9, 2012

Apollo Tyres | 3QFY2012 Result Update

Profit and Loss Statement (Consolidated)

Y/E March (` cr) Net Sales Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amort. EBIT % chg (% of Net Sales) Interest & other charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Items PBT Tax (% of PBT) PAT Adj. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY08 4,695 4,695 9.4 4,098 2,929 338 440 390 597 49.5 12.7 130 467 65.6 10.0 89 26 6.5 405 106.4 (0) 406 136 33.4 270 270 130.4 5.7 5.5 5.5 118.9 FY09 4,995 4,995 6.4 4,573 3,411 337 415 410 422 (29.3) 8.5 129 294 (37.2) 5.9 112 31 14.7 213 (47.3) (1) 214 74 34.7 140 139 (48.4) 2.8 2.8 2.8 (50.0) FY10 8,121 8,121 62.6 6,936 4,581 539 1,088 727 1,185 180.7 14.6 254 931 216.9 11.5 134 117 13.7 914 328.3 59 855 261 30.5 594 653 369.5 8.0 13.0 13.0 369.5 FY11 8,868 8,868 9.2 7,880 5,302 638 1,155 784 988 (16.6) 11.1 272 716 (23.1) 8.1 198 29 5.4 547 (40.1) 11 536 106 19.8 430 441 (32.5) 5.0 8.7 8.7 (32.5) FY12E 12,061 12,061 36.0 10,946 7,460 856 1,568 1,061 1,115 12.8 9.2 316 799 11.5 6.6 276 25 4.6 548 0.1 0 548 142 26.0 405 405 (8.0) 3.4 8.0 8.0 (8.0) FY13E 13,580 13,580 12.6 12,191 8,308 930 1,759 1,195 1,388 24.5 10.2 360 1,028 28.7 7.6 262 28 3.5 794 44.9 0 794 238 30.0 556 556 37.0 4.1 11.0 11.0 37.0

February 9, 2012

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Apollo Tyres | 3QFY2012 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 1,955 750 1,205 95 22 5 1,484 285 171 1,028 807 677 2,004 2,284 882 1,402 281 24 5 1,423 362 206 855 700 723 2,435 5,563 3,120 2,443 536 118 6 2,439 349 310 1,780 1,614 824 3,926 6,903 3,501 3,403 503 117 11 3,290 191 395 2,704 2,113 1,177 5,210 7,781 3,817 3,964 545 117 17 4,152 452 579 3,120 2,703 1,449 6,091 8,181 4,177 4,004 573 117 21 4,504 338 652 3,513 2,810 1,694 6,408 49 1,134 1,182 646 176 2,004 50 1,299 1,350 891 194 2,435 50 1,917 1,968 1,707 251 3,926 50 2,362 2,413 1 2,480 316 5,210 50 2,723 2,774 1 3,000 316 6,091 50 3,190 3,241 1 2,850 316 6,408 FY08 FY09 FY10 FY11 FY12E FY13E

February 9, 2012

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Apollo Tyres | 3QFY2012 Result Update

Cash Flow Statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Others Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balance Closing Cash balance FY08 406 130 (47) 109 (26) (136) 435 (18) 26 8 72 (177) 29 (276) (352) 91 194 285 FY09 214 129 32 212 (31) (74) 480 31 46 245 27 (234) 83 77 285 362 FY10 855 254 (115) 696 (117) (261) 1,312 (1) 117 816 44 1,231 2,091 (13) 362 349 FY11 536 272 (510) 254 (29) (106) 416 (1,307) (5) 29 (1,284) 773 29 (93) 709 (158) 349 191 FY12E 548 316 (11) (25) (142) 686 (919) (6) 25 (900) 520 44 476 261 191 452 FY13E 794 360 (359) (28) (238) 529 (427) (4) 28 (404) (150) 88 (238) (114) 452 338

(517) (3,533)

(485) (3,417)

February 9, 2012

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Apollo Tyres | 3QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT/Interest) 0.3 0.6 5.3 0.4 1.2 2.6 0.7 1.1 6.9 0.9 2.3 3.6 0.9 2.3 2.9 0.8 1.8 3.9 2.4 53 26 58 29 2.4 49 20 47 28 2.1 36 23 41 19 1.4 57 36 61 30 1.6 58 37 61 30 1.7 58 37 62 32 23.8 27.2 21.3 13.2 14.2 8.4 29.3 26.0 29.8 15.7 14.3 17.0 14.1 14.2 13.5 16.5 16.9 30.8 10.0 0.7 2.7 18.1 8.0 0.5 22.8 5.9 0.7 2.6 10.1 9.5 0.3 10.3 11.5 0.7 2.9 22.9 7.2 0.6 31.8 8.1 0.8 2.1 13.4 7.6 0.8 18.1 6.6 0.7 2.3 11.1 7.5 0.9 14.5 7.6 0.7 2.3 12.3 6.3 0.8 17.3 5.5 5.5 8.2 0.5 24.2 2.8 2.8 5.3 0.4 26.8 13.0 13.0 16.8 0.7 39.0 8.7 8.7 13.9 0.5 47.9 8.0 8.0 14.3 0.8 55.0 11.0 11.0 18.2 1.5 64.3 13.7 9.2 3.1 0.7 0.9 6.8 2.0 27.4 14.2 2.8 0.6 0.9 10.3 1.8 5.8 4.5 1.9 1.0 0.6 4.4 1.3 8.6 5.4 1.6 0.7 0.7 6.2 1.2 9.4 5.3 1.4 1.0 0.5 5.7 1.0 6.9 4.2 1.2 2.0 0.5 4.5 1.0 FY08 FY09 FY10 FY11 FY12E FY13E

February 9, 2012

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Apollo Tyres | 3QFY2012 Result Update

Research Team Tel: 022 - 3935 7800 DISCLAIMER

E-mail: research@angelbroking.com

Website: www.angelbroking.com

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Apollo Tyres No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 9, 2012

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