Apollo Tyres Ltd

Data basis. P&L lines in Tables 6.1–6.3 use the StockAnalysis/S&P-standardised consolidated series (INR million converted to crore) for internal consistency [V]. Company-reported "revenue from operations" and "EBITDA/operating profit" differ for some years and are shown separately. FY21 is excluded because a verified standardised series was unavailable [NPD].

Income statement

Sources: StockAnalysis consolidated income statement (FY22–FY26) [V]; company FY26 and FY25 revenue and PAT confirmed by Kotak Neo/Business Standard [V]. FY22 company-reported revenue (₹20,948 crore) is [PK]. The ₹367 crore gap with the standardised figure reflects classification of other operating revenue.

Source: Kotak Neo FY26 results (operating profit ₹4,143 crore vs ₹3,572 crore; FY26 exceptional charges of ₹742 crore after tax, partly offset by a one-time tax reversal in Q4) [V]. FY25 exceptional items were not quantified in sources reviewed, so the 0 is a placeholder [NPD]. The company EBITDA of ₹4,143 crore (14.6% margin) is higher than the standardised ₹3,697 crore because of definitional differences (treatment of other operating income and specific items).

Per-share data

EPS is derived as net income divided by about 63.51 crore shares [D]. Reported EPS may differ marginally; for example, Q1 FY27 reported EPS was ₹5.52 on PAT of ₹348.7 crore. Diluted EPS was not separately verified [NPD]. The FY26 DPS of ₹6.00 (₹3.50 interim + ₹2.50 final, i.e. 600% of face value) is [V]. FY22–FY25 DPS values are [PK].

Margins and growth

Source: StockAnalysis [V]; margins derived [D]: Revenue CAGR. FY22 to FY26 was about 8.0% on company-reported revenue, or about 8.5% on the standardised series [D]. Net income CAGR over the same period was about 21% [D].

Quarterly progression (FY26 to Q1 FY27):

Sources: Business Standard (Q1 and Q2 FY26); AlphaStreet and Angel One (Q3 FY26); Kotak Neo and AskFuzz (Q4 FY26); Rubber World, Investywise and Sharekhan (Q1 FY27) [V]. Q3 revenue reconciles: FY26 total of ₹28,471 crore minus the other three quarters gives ₹7,743 crore [D].

Commentary. The five-year record shows three distinct regimes.

FY22–FY23: recovery with thin margins: Revenue grew about 20% a year on post-COVID volume recovery and price pass-through. However, gross margins of 38–39% and EBITDA margins of 11–12% were compressed by the 2021–22 commodity spike.

FY24: peak profitability: Softer rubber and crude-derivative costs, plus earlier price increases, lifted gross margin by about 550 bp to 44.4%. Standardised EBITDA margin reached 16.0% and net income hit ₹1,722 crore, the high-water mark of the period.

FY25–FY26: demand slowdown, restructuring, then a rebound: - FY25 revenue growth slowed to 2.9% as Indian OEM and replacement demand softened.

• Raw material costs rose again, so FY25 net income fell 35%.

• FY26 revenue rebounded 9%. Drivers were the GST rationalisation on tyres in September 2025, high-teens growth in both Indian channels in Q4, and premiumisation in Europe (UHP mix about 50%).

• Reported net income in FY26 was depressed by ₹742 crore of after-tax Netherlands restructuring and impairment charges, so underlying FY26 profit was materially higher than the ₹1,372 crore reported.

Q1 FY27: margin squeeze resumes: Revenue rose 12.8% but EBITDA was flat at ₹868 crore, and the margin fell to 11.7%. Raw material inflation (natural rubber at about ₹250/kg against about ₹200/kg earlier) outpaced price increases. The 26-fold headline jump in profit is largely a base effect: Q1 FY26 carried the ₹273 crore Netherlands charge.

Balance sheet

Source: FilingReader summary of the FY26 investor presentation (net debt reduced by ₹900 crore to ₹1,600 crore; net debt/EBITDA 0.4x vs 0.7x) [V]. The FY25 net debt figure is derived as ₹1,600 + ₹900 crore [D]. The 0.32x gearing at 31 March 2026 is from CRISIL, 14 Aug 2026 [V]; the FY25 value is a placeholder [NPD].

• total assets

• cash and equivalents

• short- and long-term debt split

• total equity

• goodwill and intangibles (Vredestein and Reifencom goodwill exists [PK])

• working capital

Standalone borrowings. Long-term borrowings with initial maturity over one year (excluding ECBs) stood at ₹2,917.84 crore at 31 March 2024, provisional (Large Corporate disclosure) [V].

Commentary. The company has deleveraged steadily since the debt-funded Hungary and Andhra Pradesh build-outs of FY17–FY21. Net debt/EBITDA of 0.4x gives substantial headroom for the ₹3,500 crore FY27 capex. One broker summary of management commentary says peak net debt/EBITDA is expected to stay below 2x (Tijori) [V-secondary]. CRISIL expects gearing to stay "well below ~0.5x" at end-FY27.

Cash flow

Source: ScanX aggregator [V-secondary]. Whether these are consolidated or standalone figures is not confirmed. Net investing includes treasury and investment movements, so the proxy row is not capex-based FCF.

Capex:

• FY26 guidance was about ₹1,500 crore (ERJ, May 2025) [V]. FY27 capex of ₹3,500 crore is "roughly 2.5x" FY26, which implies FY26 actual capex of about ₹1,400 crore [D].

• FY27 guidance is ₹3,500 crore, of which about ₹3,000 crore is for India and the balance for Hungary; about 80% is growth capex [V].

Dividends paid in FY26. About ₹540 crore [D], made up of the FY25 final dividend of ₹5 paid in FY26 plus the FY26 interim of ₹3.50, multiplied by about 63.5 crore shares.

Buybacks. None identified in the period [V-absence].

Ratios

Derived from the standardised series [D]: FY26 ROCE of 13.4% is stated as about 240 bp higher than FY25 (Q4 FY26 call, via ScanX) [V]. The FY25 value is derived [D].

CRISIL's gearing of 0.32x is the best available proxy for debt/equity.

Management guidance (FY27)

Capex: about ₹3,500 crore, of which about ₹3,000 crore is India; FY28 may exceed ₹3,000 crore; tapering in FY29 [V].

Margins: pressure in H1 FY27 from natural rubber; recovery expected from H2 FY27 as rubber cools from Q3 [V].

Europe: Hungary ramp from H2 FY27; 16%+ EBITDA margin over the medium term [V].

Capacity: AP expansion comes on stream around end-FY27 and ramps through FY28 [V].

Consensus expectations

• CRISIL expects about 13% FY27 revenue growth, helped by price increases [V].

• Earlier consensus (Simply Wall St, late 2025) assumed about 6.8% annual revenue growth over three years [V-secondary].

• The average target price of about ₹477 implies roughly 19% upside from about ₹400 [D].

Bull case

1. The Europe margin reset is real and close. Enschede overlap costs ended on 30 June 2026. Hungary operates at 94% utilisation with PCR capacity rising about 24%. If Europe moves from 8.9% toward even 12–13% EBITDA on about ₹8,000+ crore of annual revenue, consolidated EBITDA rises by roughly ₹300+ crore [D].

2. Raw-material normalisation brings operating leverage. Q1 FY27 volumes grew double digits with India utilisation at 91%. Rubber cooling from Q3 FY27 could restore FY26-level margins (14.6%) on a 10–13% higher revenue base.

3. The balance sheet funds growth without dilution. Net debt/EBITDA of 0.4x and an AA+ rating mean the ₹3,500 crore capex keeps leverage under 2x. Meanwhile, the stock trades at about 6.6x EV/EBITDA, below MRF and CEAT.

Bear case

1. A margin-trough capex cycle. The industry is adding about ₹18,000 crore of capacity over FY27–FY28 while Apollo spends 2.5x its prior capex. If demand normalises after the GST pull-forward, FY28–FY29 pricing may erode returns (ROCE was 13.4% in FY26).

2. Europe stays structurally sub-scale. A segment PBIT margin of about 0.7% in Q1 FY27 and low-margin Reifencom suggest that the 16% target may slip. Translation gains from a strong euro have been flattering INR growth (Q2 FY26 +13.6% in INR versus +4% in EUR).

3. Governance and flows. The CFO seat is vacant during peak capex. FPI ownership has halved since FY23. Brokers (JPMorgan, Nomura) have turned cautious, so a rerating would need clear evidence of margin recovery.

Catalysts and monitorables (next 12 months)

Analyst verdict

Apollo Tyres enters the second half of FY27 at an inflection that is visible in the numbers but not yet in the price.

FY26 delivered what management promised. Revenue reached a record ₹28,471 crore (+9%), company-defined EBITDA rose 16% to ₹4,143 crore (14.6% margin), and ROCE improved about 240 bp to 13.4%. Net debt fell to ₹1,600 crore (0.4x EBITDA). Most importantly, the Enschede restructuring was executed on schedule, with production ending on 30 June 2026. Reported profit understates the underlying improvement because ₹742 crore of after-tax restructuring charges went through the FY26 P&L.

The market's scepticism is nonetheless justified on three counts.

First, raw materials have turned against the company. Q1 FY27 EBITDA was flat on 13% revenue growth, and the margin fell to 11.7%.

Second, Apollo is starting its heaviest capex cycle in nearly a decade, about ₹3,500 crore in FY27 and over ₹3,000 crore likely in FY28. It does so alongside peers adding around ₹18,000 crore of industry capacity, and without a permanent CFO.

Third, Europe remains the weak link. It earned a segment PBIT margin below 1% in Q1 FY27, against a 16% EBITDA ambition.

At about ₹400, the stock trades on roughly 15x trailing earnings and about 6.6x EV/EBITDA, at a discount to MRF and CEAT. That price reflects real uncertainty, but it largely prices out the European recovery.

The investment case depends on two observable things in the next two quarters: Europe's EBITDA margin moving decisively above 10% after the Enschede closure, and a consolidated margin recovery toward 13–14% as rubber eases. Delivery on both would support a rerating toward the consensus target of about ₹477. Failure would leave Apollo a balance-sheet-strong but low-return cyclical.

Net assessment: constructive but conditional. The analyst sees an Accumulate-type stance, gated by the Q2 and Q3 FY27 margin trajectory and by the quality of the CFO appointment.

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Primary sources consulted (2025–26):

• NSE/BSE corporate filings: board outcomes of 14 May 2026 and 13 Aug 2026; postal ballot notice of 7 Sep 2026; prior intimations; debt disclosures

• 53rd AGM transcript (29 Jul 2026)

• CRISIL rating rationales (27 Dec 2024, 24 Dec 2025, 14 Aug 2026)

• Q1 FY27 and FY26 investor presentation summaries (Investywise, FilingReader)

• Company press releases (Rubber World)

• Earnings-call summaries (ScanX, Arthneeti, DSIJ, Quartr)

Secondary sources:

• Business Standard, Kotak Neo, Angel One, Tire Review, European Rubber Journal, Commercial Tyre Business, HeavyQuip

• StockAnalysis, Trendlyne, Upstox, Sharpely, Tickertape, Investing.com, Craytheon, Equitymaster, Revelio Labs

• Sportcal, SportsKhabri, Brand Finance (via Rubber World)

Figures flagged [PK] or [NPD] should be validated against Annual Report FY26 before use in investment decisions.