New Delhi: Apollo Tyres Ltd’s Jan-Mar consolidated net profit is seen rising 48% on year to 2.10 bln rupees, mainly on account of benign prices of natural rubber, the tyre maker’s most important raw material.

An average of estimates from 10 brokerages sees the company’s Jan-Mar consolidated net sales rising 9% on year to 32.98 bln rupees.

The company will detail its Jan-Mar earnings on Thursday. Analysts will look for the company management’s outlook on recovery in tyre replacement demand in India and Europe.

The company gets a bulk of its sales from replacement tyre sales. The outlook for overall demand recovery in India will also be sought. India remains Apollo Tyres’ largest market.

Apollo Tyres’ domestic operation is expected to continue to grow decently, backed by stable operating margin and sanguine commodity costs Anand Rathi Share and Stock Brokers Ltd said in a report.

The brokerage has a buy rating on Apollo Tyres’ shares and expects a 10.4% on year revenue growth in consolidated operations. “While demand recovery may not be visible in the consolidated operations, the shift to amore profitable product mix would help,” the brokerage said.

Apollo Tyres’ consolidated operating margin is seen at 12.4% up 70 basis points on year, Anand Rathi said.

Other brokerages also expect a year-on-year growth in the company’s operating margin during the reporting quarter, owning to weakness in prices of natural rubber.

In a strong market, at 1237 IST, shares of Apollo Tyres traded over 5% higher at 176.25 rupees on the National Stock Exchange.

Apollo’s proposed acquisition of US company Cooper Tire was a near-term overhang on the company’s shares. With recent events now clearing the potential financial burden that a leveraged buyout posed, brokerages see the company’s outlook as much brighter.

The buyout deal was seen as a debt-heavy acquisition for the company. On Jun 12, Apollo Tyres had said it would acquire Cooper Tire in an all-cash deal valued at $2.5 bln.

However, the situation changed soon after with US company facing labour issues. On Dec 30, Cooper Tire terminated the merger agreement with Apollo Tyres, alleging a breach of the merger pact by the latter.

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