Apollo Tyres slumps 26 % on debt concerns

June 13, 2013 11:17 pm | Updated June 07, 2016 06:22 am IST - MUMBAI:

Shares of Apollo Tyres, on Thursday, fell sharply by 26 per cent on concerns over debt burden due to the company’s acquisition of the U.S.-based Cooper Tire & Rubber Co for about Rs. 14,500 crore ($ 2.5 billion).

The stock fell to 52-week low of Rs. 67.75, down by 26.35 per cent on BSE during the day. It settled at Rs. 68.60, showing sharp loss of 25.43 per cent over previous close.

On the National Stock Exchange, the stock nosedived by 26.05 per cent to close at Rs. 68.

Tracking weakness in the stock, the market value of the company tanked by Rs. 903 crore to Rs. 3,734 crore.

“We are concerned about the huge debt burden which could strain the balance sheet of the combined entity,” said Surjit Arora, Research Analyst (Institutional Equities) at Prabhudas Lilladher. “While the acquisition will be positive for the company in the longer run, the near-term challenge for the company would be to successfully integrate Cooper Tire and Rubber Company operations with itself,” Angel Broking said in a report. Post the transaction, Apollo Tyres will become the seventh largest tyre maker in the world by revenue at $6.6 billion from its current 16th position at $ 2.5 billion and give it greater access to the US, the second largest automobile market in the world after China.

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