01 — At a Glance
The Rubber Cycle Returns. India Bets Big on Capacity.
- 52-Week High / Low₹540 / ₹368
- Q3 Revenue (Consol.)₹7,743 Cr
- Q3 PAT₹488 Cr
- Q3 EPS₹7.41
- Annualised EPS (Q3×4)₹29.64
- Book Value₹245
- Price to Book1.76x
- Dividend Yield1.16%
- Debt / Equity0.29x
- Net Debt / EBITDA0.4x
The Narrative So Far: Apollo delivered record quarterly revenue of ₹7,743 crore, a 11.8% YoY jump, with PAT surging 43.4% to ₹488 crore. All segments grew double digits. Europe margins expanded sharply. And the board just approved ₹5,810 crore in capex over FY27–FY29 to add 17–18% PCR and 20%+ TBR capacity in Andhra Pradesh. The stock remains down 17.9% over 3 months, trading at 18.7x P/E. Markit fears capex intensity. Investors chasing larger tyres are looking elsewhere. Classic misplacement of fear and capital.
02 — Introduction
Welcome to the Business of Preventing Your Car From Exploding
Apollo Tyres. Established 1972. Five plants in India. Two in Europe. Nine million tyres a year. One mission: make sure the rubber between your 2,000-kilogram car and the asphalt doesn’t spectacularly fail at 100 kmph. Surprisingly unglamorous for a ₹27,000-crore business.
The company has spent three years in the mud. FY24 was margin compression hell — raw material prices erupted, inflation ravaged operating leverage, and Europe remained a zombie. Management’s response? Double down. Expand capacity. Shift towards premium products. Restructure loss-making operations. Die in the attempt or emerge leaner.
Q3 FY26 is the first real signal that the cycle might be turning. Revenue hit the highest quarterly level in history. Volume momentum was double digits across truck-and-bus (TBR), passenger car radial (PCR), and farm tyres. Europe finally showed pulse — margins bounced to 17.9%, the best in years. Raw material prices stabilised. And management finally greenlit the big capex that every analyst has been screaming for.
The twist? The stock got murdered. Down 17.9% in three months. Why? Because tyre stocks are a classic left-brain trade — investors calculate net debt/EBITDA, see leverage spike near-term due to capex, and sell reflexively. Nobody has time for “capex in FY27–FY29” when they can complain about leverage today.
Concall Reality Check (Feb 2026): Management on record saying “highest ever quarterly revenue, both on standalone and consolidated basis.” Yet the stock trades like the company just revealed a mining accident. Fear of capex — not fear of fundamentals — is driving sentiment.
03 — Business Model: Rubber, India, and the Global Cycle
They Sell Tyres. Lots of Them. To Everyone Who Drives.
The business is straightforward until you zoom out. Apollo makes tyres for trucks, buses, cars, motorcycles, farm equipment, and off-highway machinery. Some are OEM sales (sold to manufacturers pre-assembly). Most are replacement sales (consumers buying tyres after the factory ones wear out). Europe adds complexity — import duties, labour costs, and weak demand — but contributes 30% of consolidated revenue.
Market share: 28–29% in truck-and-bus (TBR), ~20% in passenger car radial (PCR). That’s not a niche. That’s market leadership in two of the three most profitable tyre segments in India. The replacement market is 80%+ of consolidated revenue — recession-resistant, margin-friendly, and volume-driven.
The distribution network is the moat. 7,200 dealers in India. 6,600 in Europe. Every mechanic, tyre shop, and dealership has Apollo in stock. Once your car needs new rubber, brand recall and dealer convenience determine the choice. Apollo has spent 54 years building distribution deeper than any competitor’s.
Expansion momentum is now underway into premium segments, EV-compatible fluids, and industrial-use lubricants (yes, tyre companies make lubricants too). Rural penetration — still underdeveloped — is a greenfield. OEM relationships with Maruti, Hyundai, and Mahindra are multi-year, sticky deals. Vredestein (European brand) is slowly becoming a legitimate premium play.
TBR Segment39%Revenue Mix
PCR Segment39%Revenue Mix
Farm/Off-Highway10%Revenue Mix
Light Truck7%Revenue Mix
Raw Material Linkage: ~55% of revenue is raw materials (natural rubber, synthetic rubber, carbon black, steel cord). 40–50% imported. That means FX headwinds and commodity supercycles are permanent features, not temporary scares. Apollo’s hedging strategy: 100% hedged FX borrowing, 75–100% hedged on operational importer exposure. Smart. Not heroic.
💬 Do you think India’s replacement tyre market is mature, or does rural penetration still offer 10+ years of upside? Drop your take.
04 — Financials Overview: Q3 FY26
The Numbers That Broke a Nine-Quarter Drought
Result type: Quarterly Results | Q3 FY26 EPS: ₹7.41 | Annualised EPS (Q3×4): ₹29.64 | FY25 Full-Year EPS: ₹14.58
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 7,743 | 6,928 | 6,831 | +11.8% | +13.3% |
| EBITDA | 1,186 | 947 | 1,021 | +25.2% | +16.2% |
| EBITDA Margin % | 15.3% | 13.7% | 15.0% | +160 bps | +30 bps |
| PAT | 488 | 337 | 258 | +43.4% | +89.2% |
| EPS (₹) | 7.41 | 5.31 | 4.06 | +39.5% | +82.5% |
The Margin Surprise: Q3 EBITDA margin expanded 160 basis points YoY to 15.3%. This isn’t volume-driven cheating — it’s genuine operational leverage. Raw material prices stabilised. Distribution improved. Mix shifted towards premium. The same margin headwind that crushed FY24 has actually reversed. And management is not even projecting heroics for FY27. Just “13–15% normalized.”
05 — Valuation: Fair Value Range
What’s This Rubber Company Actually Worth?
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