Is Now An Opportune Moment To Examine Apollo Tyres Limited (NSE:APOLLOTYRE)?

Apollo Tyres Limited (NSE:APOLLOTYRE), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Apollo Tyres’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Apollo Tyres

Is Apollo Tyres still cheap?

According to my valuation model, Apollo Tyres seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Apollo Tyres today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₹252.56, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Apollo Tyres’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Apollo Tyres look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Apollo Tyres' earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? APOLLOTYRE’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on APOLLOTYRE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Apollo Tyres at this point in time. While conducting our analysis, we found that Apollo Tyres has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Apollo Tyres, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.