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    Apollo Tyres Q1 FY27 earnings call

    APOLLOTYRE
    Automobile and Auto Components·7 Aug 2026
    Management Summary

    Apollo Tyres reported a strong Q1 FY27 with consolidated revenue growing 12.8% YoY to INR 74 billion, driven by robust performance in India which saw its highest ever quarterly revenue. Despite a challenging macro environment and sharp raw material cost escalation of nearly 17%, the company managed to defend margins through pricing actions. Europe operations faced headwinds from geopolitical issues and transition costs, but PCR replacement segment showed healthy growth. The company is focused on capacity expansion and expects benefits from restructuring to materialize in H2 FY27.

    Highlights

    5

    • Consolidated top line growth of 12.8% Y-o-Y to INR 74 billion, despite a challenging macro environment.

    • India Operations delivered its strongest year-on-year quarterly growth in the last 14 quarters, with revenue reaching INR 54.6 billion, a 15.6% Y-o-Y increase.

    • India operations achieved double-digit growth across all segments (replacement 13%, OEM 10%, exports 15%).

    • PCR replacement segment in Europe continues to deliver healthy growth and positive momentum.

    • Successfully defended margins through calibrated price increases and disciplined cost control despite sharp raw material cost escalation.

    Concerns

    5

    • EBITDA margin declined by 150 basis points year-on-year to 11.7% primarily due to RM cost pressures.

    • Raw material costs escalated sharply during Q1 by nearly 17%.

    • Geopolitical situation in West Asia continued to create headwinds, leading to heightened uncertainty and cost volatility.

    • Europe EBITDA margin was lower at 8.9% (vs 10.8% last year) due to cost overlaps from Enschede closure and transition.

    • Some revenue in Europe was impacted by the Enschede plant closure transition.

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹7,400 Cr+12.8%YoY
    2. 02Consolidated EBITDA Margin11.7%
    3. 03India Revenue₹5,460 Cr+15.6%YoY
    4. 04India EBITDA Margin12%
    5. 05Europe Revenue147 Mn+0.5%YoY

    Segment breakdown

    RevenueYoY GrowthEBITDA Margin
    India Operations₹5,460 Cr15.6%12%
    Europe Operations₹147 Cr0.5%8.9%
    Reifen (Europe)₹43 Cr——
    Heatmap· 3 shared metrics

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹650 crores

    Debt

    Net ₹1,700 crores · 0.4x EBITDA

    Guidance & targets

    8
    CategoryTargetPriority
    Raw Material Costs
    Sequential RM inflation for India Operations
    8%
    		High
    Raw Material Costs
    Rubber prices
    start cooling down
    		High
    Europe Operations
    Financial and operational benefits of restructuring
    start materialising
    		High
    Europe Operations
    Enschede project completion
    September, October of 2026
    		High
    Europe Operations
    EBITDA margin aspiration
    high teens
    		Medium
    Capacity Expansion
    Hungary car tyre capacity increase
    21,000 car tyres
    		High
    Capacity Expansion
    India capacity coming on stream
    start coming on stream
    		High
    Debt
    Net debt to EBITDA ratio
    go up slightly
    		High

    What to watch in Q2 FY27

    5

    Europe restructuring benefits materialization

    H2 FY27
    CurrentExpected to start materializing from H2 FY27
    TargetEvidence of financial and operational benefits

    Why it matters

    Crucial for improving Europe's profitability and achieving the high-teens EBITDA margin aspiration.

    The Netherlands plant stopped production as planned in June 2026, and we expect the financial and operational benefits of the restructuring to start materialising from H2 of the current fiscal year.

    Risks & concerns

    6
    RiskSeverity

    Challenging macro environment

    Q1 FY27 proved to be a challenging quarter given the macro environment. — Management acknowledged

    medium

    Raw material cost pressures

    EBITDA margin down about 150 basis points year-on-year, primarily on account of RM cost pressures; RM costs escalated sharply during Q1 by nearly 17%. — Management acknowledged

    high

    Geopolitical situation in West Asia

    Geopolitical situation in West Asia continued to create headwinds in select international markets, leading to heightened uncertainty and cost volatility. — Management acknowledged

    medium

    Volatile commodity prices

    Commodity prices are likely to remain volatile until the geopolitical situation in West Asia stabilises. — Management acknowledged

    medium

    Potential impact of El Nino on demand

    Analyst asked if El Nino could moderate demand, management stated it's always possible but demand has been strong. — Analyst acknowledged

    low

    Elevated domestic natural rubber prices

    Domestic rubber prices are very highly elevated despite normalization of West Asia war; management expects prices to cool down from Q3. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “But let me first begin with the announcement concerning myself. I had been thinking for some time to take up a new challenge and decided now that it is the appropriate time, having completed the Enschede project, which I was an integral part of over the last 18 plus months. It was an emotional decision to leave Apollo Tyres after 22 plus years career here.”

    Signals a significant change in the company's leadership, as the CFO of 22+ years is leaving.

    asked by Amyn Pirani

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview and Macro Environment

    Apollo Tyres reported a consolidated revenue of INR 74 billion for Q1 FY27, marking a 12.8% year-on-year growth. However, the EBITDA margin saw a 150 basis points decline year-on-year, settling at 11.7%, primarily due to significant raw material cost pressures. The quarter was characterized by a challenging macro environment and muted sequential growth, with raw material costs escalating by nearly 17%.

    02

    India Operations: Record Revenue and Strong Growth

    The India Operations delivered its strongest year-on-year quarterly growth in the last 14 quarters, achieving its highest ever revenue of INR 54.6 billion, a 15.6% increase year-on-year and 4.3% sequentially. This growth was largely volume-led, with double-digit growth across all segments: replacement (13%), OEM (10%), and exports (15%). The EBITDA margin for India stood at 12%, down from 13.6% in the corresponding period last year.

    03

    Europe Operations: Transition Challenges and Future Aspirations

    Europe operations recorded EUR 147 million in revenue, a modest 0.5% year-on-year growth, with an EBITDA margin of 8.9%, down from 10.8% previously. This was partly due to cost overlaps from the Enschede plant closure and transition, which impacted some revenue. The PCR replacement segment in Europe continues to show healthy growth. Management aspires for high-teens EBITDA margins for Europe on a full-year basis post-restructuring, with benefits expected from H2 FY27.

    04

    Raw Material Costs and Pricing Actions

    Raw material costs escalated sharply by nearly 17% in Q1. To counter this, the company implemented staggered price increases, with 7-9% taken in Q1, and the full effect expected in Q2. Overall, 15-16% price increases are needed to cover inflation, but only 9% for TBR and 11%+ for other categories have been implemented so far. Management anticipates an 8% sequential increase in raw material inflation for India in Q2 and expects rubber prices to cool down from Q3 onwards.

    05

    Capacity Expansion and Strategic Shifts

    The Enschede project completion is anticipated by September-October 2026. Capacity shifting from Netherlands to Hungary and India is underway, with Hungary's car tyre capacity expected to increase from 17,000 to 21,000 in H2. India's new capacity is projected to come on stream towards the end of this year and ramp up through FY28. Q1 consolidated CapEx was INR 650 crores, and the net debt to EBITDA ratio stood at 0.4, though it is expected to increase slightly for the full year as the company will be a net borrower.

    06

    Digitalization and Sustainability Initiatives

    The company continues its digitalization journey with the global S/4HANA program and AI deployment in manufacturing, yielding tangible productivity and cost benefits. Brand engagement was strengthened through integrated campaigns, including the ICC Women's T20 World Cup campaign, which generated over 220 million consumer reach. Apollo Tyres also exceeded its FY '26 environmental commitments and is recognized among India's top 30 most sustainable companies.

    This is an AI-generated summary of a publicly available earnings call transcript.