UBS has upgraded its rating for Apollo Tyres' stock to 'buy' from 'neutral', while also raising its target price to Rs 590, from Rs 580 earlier.
The brokerage believes that the market is underappreciating the tyre-maker's medium term earnings recovery potential, as the stock continues to trade at a discount to peers.
Apollo Tyres' India operations are approaching inflection point, while Europe will see a "better road ahead", according to UBS.
Overall outlook for the company is improving as management takes concrete steps to strengthen the India business, even though second quarter of fiscal 2027 may endure further pressure considering the rising natural rubber prices.
Even so, the brokerage thinks that investors are "overly focused" on near-term commodity cost headwinds and recent execution challenges.
UBS expects a meaningful improvement in earnings thereafter, with earnings before interest, taxes, depreciation and amortisation rising 21% year-on-year in the next financial year.
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Apollo Q1FY27
Apollo Tyres reported strong growth in revenue and a sharp recovery in net profit in Q1FY27, but a fall in EBITDA margin shows that higher costs continued to pressure core operations.
The company posted a consolidated net profit of Rs 349 crore for the quarter ended June 2026, compared with Rs 12.8 crore in in the year-ago period. The sharp rise was helped by the change in exceptional items. The company reported a one-time gain of Rs 24 crore, compared with a loss of Rs 370 crore a year ago.
Revenue from operations increased 12.8% year-on-year to Rs 7,398 crore, from Rs 6,561 crore in the year-ago quarter. However, the earnings before interest, taxes, depreciation and amortisation remained almost flat at Rs 868 crore, compared with Rs 869 crore last year. As a result, the EBITDA margin declined to 11.7% from 13.2%.
Apollo Tyres Share Price
The shares of Apollo Tyres closed 2.42% higher on Friday at Rs 439.7. The stock has fallen over 12% year-to-date, and 5.6% in the last 12 months.
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