Apollo Tyres Q3 Results Review — Normalising Raw Material Improves Margin Outlook; Nirmal Bang Maintains 'Buy'

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Nirmal Bang Report

It was a better quarter for Apollo Tyres Ltd. in terms of operating performance in both India and Europe. Standalone revenue came in ~5% YoY, limited by 10% volume decline in original equipment manufacturers offset by the replacement segment across categories, up 5% YoY. Ebitam of 11.1% was down 700 bps YoY (the highest margin compression amongst peers due to the higher share of truck-bus-radial).

Europe revenue stood at €181 million and Ebitda stood at €32 million with margins at 17.7%. Consolidated revenue came in at ~Rs 69 billion largely in line up 5% YoY. Margins came in at 13.7% versus our estimate of 14.5% <465bps YoY. Earnings came in at Rs 3.4 billion versus our estimate of Rs 3.8 billion.

We maintain Buy on the stock valued at 16x Dec’26E EPS (17x earlier due to the revision in volume outlook) to come to a target price of Rs 529, Our positive stance is hinged on the improving margin and domestic volume outlook, entering into new export markets, outperformance in EU and moderate capex intensity, overall improving return ratios. We have cut our EPS estimate by ~4.6%/4.9% for FY26/27.

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