Steady revenue perks up shares of Apollo Tyres, margins remain weak

Shares of Apollo Tyres Ltd took off after its first-quarter (Q1) results were announced, despite the below-par numbers on most counts. As it turns out, the Street was enthused that the company could maintain revenue growth in an otherwise subdued auto market

Besides, the Apollo Tyres stock has been on a downturn, falling about 33% this year. That’s perhaps why it saw a pullback of about 5.2% in trading on Wednesday.

Revenue for June quarter saw subdued growth of about 0.5% year-on-year. Even compared to the preceding quarter, revenue growth inched up marginally by 2.2%. But that seemed to be good enough for the Street, which expected a sharp slump in the original equipment market to impact revenue growth.

As it turns out, the replacement market was the saving grace for the company. The management noted in a release that while demand from automakers remained subdued, there was growth in the replacement market.

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