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Apollo Tyres:Reports Europe margin expansion within overall decent operational performance

News: Q2FY22 consolidated sales rose 10.7% QoQ to Rs.5,077 crore. Margins came in at 12.6%, up 20 bps QoQ. Within this, standalone margins dipped 10 bps to 10.3% while Europe margins were up 120 bps to 18.3%. Consolidated PAT was up 36% QoQ to Rs.174 crore aided in part by lower effective tax rate.

Views: Revenues across India and Europe were broadly in line with estimates but India revenue growth was lower peers. On the margin front, the company reported 130 bps QoQ gross margin decline and slight uptick in other expenses as a percentage of sales. Accompanied by relatively lower revenue growth, we believe ATL could have experienced product mix improvement, albeit limited volume uptick.