Shares of Apollo Tyres hit a fresh 52-week low on Friday on reports that the minority shareholders of the company have rejected the re-appointment of Neeraj Kanwar as the managing director (MD).
“Apollo Tyres’ board of directors will discuss the resolution in the next meeting and determine the course of action with respect to it. The company would like to reiterate that it is the vision and resolve of the company, and its senior leadership, to deliver value to all its stakeholders including employees, shareholders, customers, partners, and other relevant communities, “the company had said in a statement to the exchanges.
At 10:04 am, the stock was trading 3 per cent lower at Rs 215 apiece on the Bombay Stock exchange (BSE) before hitting a fresh 52-week low of Rs 206.10 apiece in morning trade.
Analysts say the move is a step in the right direction for improving corporate governance standards in India.
"The development is a good precedent for improving the corporate governance in India. Investor activation has started and the move will compell the management to try to come out clean. RBI denying YES Bank CEO Rana Kapoor extension of his tenure or investors at HDFC voting against Deepak Parekh shows that stakeholders have started executing their power and the companies cannot take shareholders for granted." said AK Prabhakar, head of research at IDBI Capital.
Adding: "The move will be a short-term negative for the stock but it's a very positive move for the company and its shares. Apollo is not an India-confined operation. That apart, tyre stocks are already under pressure after the government raised import duty on radial car tyres. Hence, the stock is expected to correct more from here."
As regards the import duty on radial car tyres, analysts at Antique Stock Broking say that passenger car radial (PCR) radial tyres is comprise around 20 per cent of the Apollo’s India revenue.
“PCR imports in India would be just 15 per cent and a significant chunk of that would be for premium high end luxury segment where there is no local manufacturing facility. So, overall there would be marginal beneficial impact on Apollo and MRF,” they said in a recent note.