Apollo Tyres hits a few bumps

The market is not very happy with the plans of Apollo Tyres announcing that it is once again eyeing foray into US markets and making stronger inroads. The company has set up a R&D team in US to focus on developing products for the US market and has also hired a business head for the region.

Somehow, the market is just not comfortable with this foray into North America as the memories of its earlier thwarted attempt to buyout Cooper Tire is still very fresh in the mind. In fact when the deal fell through, the stock price rose as there was relief that the company will not pile up debt – it had announced a deal to buy Cooper at Rs.14,575 crore which would have surely pushed the company into major debt.

The worry once again is that if it decides to acquire any other company, the same issue of leverage will arise and the market currently has no fancy for companies running up huge debts to fund their ambitious future plans.

The stock, which has yesterday hit a new 52-week high at Rs.223.75 is today in the red at Rs.215 levels