Apollo Tyres Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Apollo Tyres delivered a strong Q2 FY26 performance, driven by robust revenue growth in both India and Europe, coupled with improved profitability. The company highlighted strategic initiatives in R&D, branding, and sustainability, alongside progress in managing its capital structure and addressing competitive dynamics.

Highlights

  • Consolidated revenue grew 6% YoY to INR 68.3 billion, marking the highest revenue growth in the last 10 quarters.

  • Consolidated EBITDA margin stood at 14.9%, an improvement from 13.2% in Q1 FY26 and 13.6% in Q2 FY25.

  • India operations reported 6% YoY revenue growth to INR 47.1 billion with an EBITDA margin of 15.3%.

  • Europe operations achieved 4% YoY revenue growth to EUR 177 million, with an EBITDA margin of 12.7%.

  • Consolidated net debt to EBITDA improved to 0.8x, while India's net debt to EBITDA was 1.1x.

  • Enschede plant closure settlement cost estimated at EUR 17 million, with a projected payback period of approximately 2 years.

  • India volume growth was 4% overall, with double-digit export growth and mid-single-digit growth in Replacement and OEM segments.

Key financials

  1. Consolidated Revenue ₹6,830 Cr +6%YoY
  2. Consolidated EBITDA ₹1,020 Cr
  3. Consolidated EBITDA Margin 14.9%
  4. India Revenue ₹4,710 Cr +6%YoY
  5. India EBITDA ₹720 Cr
  6. India EBITDA Margin 15.3%

What they filed

Q1 FY27: revenue up 15.6%, net profit up 36.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,462 4,540 4,581 4,725 4,715 +6%5,139 +13%5,237 +14%5,462 +16%
EBITDA539 504 515 645 721 +34%747 +48%764 +48%655 +2%
Net profit165 124 149 222 277 +68%449 +262%903 +506%304 +37%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenueEBITDAEBITDA Margin
India Operations₹4,710 Cr₹720 Cr15.3%
Europe Operations₹177 Cr₹22 Cr12.7%

Capital allocation

high confidence
  • Capex Capex disclosed
    • PCR capacity expansion in Hungary
    • PCR capacity expansion in Andhra Pradesh
    Lastly, we continue to monitor our Capex outflow and there is no change in our Capex guidance for FY'26.
  • Debt Net ₹2,600 Cr · 0.8× EBITDA
    Our consolidated net debt stood at a level of INR 26 billion as on September 25, similar to the level in March 2025. The net debt to EBITDA for the consolidated operations stood at 0.8x at the end of this quarter.

Guidance & targets

Revenue

  • Q3 Revenue Growth Revenue · Q3 FY26 · High confidence at least at the same level
    We are hopeful that Q3 revenue growth should be, if not better, but at least at the same level.

    — Neeraj Kanwar

Profitability

  • Q3 Profitability Profitability · Q3 FY26 · High confidence remain at this level
    Profitability will continue to remain at this level, if not better.

    — Neeraj Kanwar

  • Return on Capital Employed (ROCE) Profitability · near-term · Medium confidence 15%
    But on ROCE, I would say they would be higher than what was set in the previous cycle. And we should be able to get there in near-term, aided by the current situation in India and also the boost that we would get on the European profitability.

    — Gaurav Kumar

Volume

  • India Replacement Demand Growth Volume · H2 FY26 · High confidence mid-to-high single digits
    So, we would expect the replacement demand to start moving up from this level to mid-to-high single digits.

    — Gaurav Kumar

  • India Exports Growth Volume · FY26 · High confidence high single digit
    So, exports growth was in double digits for the current quarter. We had not done well if you would remember in Q1. So overall for the year, yes, we would push towards the high single digit.

    — Gaurav Kumar

  • Europe Market Growth Volume · near-term · Medium confidence low single digits
    Outlook for Europe market overall continues to be a challenging scenario. It's still not back into the positive zone, but at least it's improved from where the situation was two quarters back. And we are looking at growth coming back, even though it would be low single digits.

    — Gaurav Kumar

Raw Material Cost

  • Raw Material Cost Trend Raw Material Cost · Q3 FY26 · High confidence stable to slightly down
    So, the raw materials in Q2 were down 3% sequentially from Q1 and we expect it to be stable to slightly down in Q3.

    — Gaurav Kumar

Restructuring

  • Enschede Plant Closure Payback Period Restructuring · within 2 years · High confidence about 2 years
    Based on our expectations, the payback period should be about 2 years.

    — Gaurav Kumar

What to watch in Q3 FY26

Q3 Revenue Growth

Next quarter (Q3 FY26 results)
Current 6% YoY (Q2 FY26)
Target at least at the same level or better

Why it matters

To assess if the company can sustain its top-line momentum following strong Q2 performance and strategic initiatives.

We are hopeful that Q3 revenue growth should be, if not better, but at least at the same level.

Risks & concerns

  • Increased competitive intensity from new entrants in India

    medium

    New financially strong players entering TBR and PCR segments could increase competition, but management plans to focus on product quality, brand, and distribution rather than price wars.

    Both acknowledged

  • Challenging demand environment in Europe

    medium

    The European market continues to be challenging, although it has shown some improvement, with expectations of only low single-digit growth.

    Management acknowledged

Q&A highlights

6 direct
Market share trends for TBR and PCR in India Direct
So, our internal estimates, we do not have official data for that. On the TBR replacement, we estimate our market share to be around 29%. And on the PCR replacement side, based on our internal estimates, we would be at 20% market share, which would be industry-leading.

Provides specific market share estimates for key segments in India and clarifies the company's competitive position.

Asked by Aniket Mhatre

OEM recovery post-GST for TBR and PCR segments Partial
We are seeing some pick-ups in the OEM side, particularly on the truck side. PCR, still not great signs, but the expectation is some amount of growth will come back, but not at the high levels, which OEM see when demand is really moving.

Clarifies the nuanced recovery in OEM demand, indicating stronger traction in trucks but slower in PCR post-GST.

Asked by Aniket Mhatre

Quantifying margin improvement from Enschede plant closure Partial
That's a difficult one to estimate, Aniket. We have indicated the total cash costs, particularly around the EUR 55 million. Based on our expectations, the payback period should be about 2 years.

Provides a financial estimate for the restructuring cost and its payback, indicating long-term profitability benefits despite immediate costs.

Asked by Aniket Mhatre

Capacity utilization across segments and Capex deployment priorities Direct
So, our capacity utilisations Mihir, is still in the 80s in India. In Europe, Enschede and Hungary are close to 90%. As I mentioned in my commentary, there is a capacity expansion, which we had already announced, passenger car, both in Hungary and Andhra Pradesh.

Offers insight into current operational efficiency and the strategic allocation of capital for future growth in key markets.

Asked by Mihir Vora

Strategy to gain TBR market share going forward Direct
No, we will not go the pricing route, Mihir, and that's been a consistent strategy. It will be a mix of brand, product and an expansion of the distribution channels. And teams are working on that to regain some of the lost market share of the last few years.

Highlights the company's non-price-led strategy for market share recovery, focusing on brand and distribution.

Asked by Mihir Vora

Competitive intensity in India with new entrants targeting TBR and PCR Direct
Yash, thanks on the results part. And yes, there are new players entering and that's been known for some amount of time. Competitive intensity will, of course, increase with a new financially strong entrant, even though they would be new in this field.

Addresses a significant industry risk and management's view on how new competition will impact the market dynamics.

Asked by Yash Agarwal

Impact of GST cut on pricing power and raw material cycle Direct
GST benefits, Chirag, have been passed on. To the second part of your question, it does give a certain headroom, but it will also depend on the competitive intensity.

Explains the immediate impact of regulatory changes on pricing and how it interacts with market competition.

Asked by Chirag Jain

Company's stance on consolidation in the Off-Highway Tyres (OHT) segment Direct
If there is something that comes up which is a small-medium size in this segment and makes sense economically, we would look at it, but we would not just jump into this segment for the sake of bulking up revenue etc. and because it is a fad and other players are entering.

Clarifies the company's cautious and strategic approach to M&A opportunities in the OHT segment.

Asked by Ronak Mehta

3 min read 7 chapters

Detailed narrative

Q2 FY26 Consolidated Performance Overview

Apollo Tyres delivered a robust Q2 FY26, achieving consolidated top-line growth of 6% year-on-year, with revenue reaching INR 68.3 billion. This performance marks the highest revenue growth in the last 10 quarters on both a standalone and consolidated basis. The consolidated EBITDA margin improved to 14.9%, up from 13.2% in the previous quarter and 13.6% in the same quarter last year, reflecting strong operational execution.

India Operations Driving Domestic and Export Growth

The India business was a key growth driver, reporting a revenue of INR 47.1 billion, a 6% increase year-on-year, and an EBITDA margin of 15.3%. Volume growth in India stood at 4% overall, with mid-single-digit growth observed in both the Replacement and OEM segments. Notably, export markets showed a strong recovery with double-digit growth, contributing significantly to the overall performance. The premium Vredestein brand also achieved its highest-ever volumes in Q2 FY26 in India.

Europe Operations Navigating Challenging Environment

European operations recorded a revenue of EUR 177 million, representing a 4% year-on-year growth and a 21% sequential increase, despite a persistently challenging demand environment. The EBITDA margin for Europe improved to 12.7% from 10.8% in the last quarter. The company's premiumization strategy continues to yield results, with the Ultra High Performance (UHP) mix increasing to 49% from 46% in the same quarter last year.

Strategic Initiatives and Sustainability Focus

Apollo Tyres is actively pursuing strategic initiatives, including securing additional model wins from German OEM manufacturers through R&D efforts. The company has also made a landmark move by becoming the lead title and jersey sponsor of the Indian cricket team, aiming to enhance brand awareness. In sustainability, Apollo Tyres improved its S&P Global ESG rating score to 58 in 2025 (up from 53 in 2024) and launched a digital healthcare application for truck drivers as part of its healthcare initiatives.

Capital Structure and Debt Management

The company maintained a healthy capital structure, with consolidated net debt at INR 26 billion as of September 25, similar to March 2025. This resulted in a consolidated net debt to EBITDA ratio of 0.8x. For India operations, net debt stood at INR 27 billion, with a net debt to EBITDA ratio of 1.1x, a slight improvement from 1.2x at the beginning of the year. The FY26 Capex guidance remains unchanged, with PCR capacity expansions in Hungary and Andhra Pradesh on track.

Market Outlook and Competitive Dynamics

Management anticipates sustained top-line growth momentum in both India and Europe, with profitable growth remaining a core focus. India is expected to see healthy demand in H2, supported by the new GST regime and recovery in infrastructure and mining segments. While acknowledging increased competitive intensity from new entrants, the company plans to counter this by focusing on brand, product quality, and distribution network expansion rather than price competition. Raw material costs are expected to be stable to slightly down in Q3.

Enschede Plant Restructuring Progress

Apollo Tyres has reached a settlement with the Works Council in the Netherlands regarding the closure of the Enschede plant. The estimated additional cost for this restructuring is EUR 17 million, with a projected payback period of approximately 2 years. The full implementation of the closure is expected by end-June 2026, which is anticipated to have a positive impact on the profitability of European operations in the long term.

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