Apollo Tyres Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Apollo Tyres delivered a strong Q3 FY26, achieving its highest-ever quarterly revenue driven by robust double-digit growth in India. Despite a muted European market, profitability improved across both key geographies. The company also announced a significant capex plan to expand capacity in India, reinforcing its commitment to profitable growth and a strong balance sheet.

Highlights

  • Consolidated revenue reached INR 7,740 crores, up nearly 12% YoY, marking the highest-ever quarterly revenue.

  • Consolidated EBITDA margin stood at 15.3%, an improvement from 13.7% in the same quarter last year.

  • India operations revenue grew over 13% YoY to INR 5,140 crores, with an EBITDA margin of 14.5%.

  • Europe operations reported EUR 180 million in revenue, remaining flattish, with an EBITDA margin of 17.9%.

  • Consolidated net debt significantly reduced to INR 1,300 crores, bringing Net Debt to EBITDA down to 0.4x from 0.8x last quarter.

  • Board approved INR 5,800 crores capex for FY27-29 to expand PCR and TBR capacities in India, with INR 3,000 crores planned for FY27.

Key financials

  1. Consolidated Revenue ₹7,740 Cr +12%YoY
  2. Consolidated EBITDA ₹1,190 Cr
  3. Consolidated EBITDA Margin 15.3% +1.6%YoY
  4. India Revenue ₹5,140 Cr +13%YoY
  5. India EBITDA Margin 14.5% +3.4%YoY
  6. Europe Revenue 180 Mn 0%YoY
  7. Europe EBITDA Margin 17.9% +0.2%YoY
  8. Consolidated Net Debt ₹1,300 Cr
  9. Consolidated Net Debt to EBITDA 0.4× -50%QoQ
  10. ROCE 13.5%

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

SegmentRevenueEBITDA Margin
India Operations₹5,140 Cr14.5%
Europe Operations₹180 Cr17.9%
Reifencom₹82 Cr8%

Capital allocation

high confidence
  • Capex ₹5,800 Cr
    • Expanding PCR and TBR capacities in AP plant ₹5,800 Cr
    • Hungary PCR expansion
    • Maintenance and operational capex ₹700 Cr
    Taking this into account, the Board of Directors in the recent meeting approved a INR 5,800 crores capex for our AP plant for expanding both the PCR and TBR capacities, spread over the next three financial years, that is FY'27, '28, and '29. As part of this, there would be a growth capex of about INR 2,000 crores in FY'27. Our capex guidance for FY'26 remains as such.
  • Debt Net ₹1,300 Cr · 0.4× EBITDA
    • Repayment Reduction in short-term borrowings as a result of strong operational cash flows; long-term debt repayment as per schedule.
    The consolidated net debt level stood at a level of INR 13 billion as at the end of this quarter, substantially lower than the INR 26 billion at the end of previous quarter.

Guidance & targets

Capex

  • Overall Capex Capex · FY27 · High confidence INR 3,000 crores
    So, I would put the overall capex number for next year closer to INR 3,000 crores, Amyn.

    — Gaurav Kumar

  • Overall Capex Capex · FY28 · Medium confidence > INR 3,000 crores
    FY'28 in fact might be even higher than the INR 3,000 crores.

    — Gaurav Kumar

  • Overall Capex Capex · FY29 · Medium confidence tapering off
    FY'29 would be a much more tapering off

    — Gaurav Kumar

Revenue

  • Revenue from New Capacity Revenue · FY28-FY30 · High confidence start in FY28, full benefit in FY30
    No, Arvind, we will start seeing some revenue flow into FY'28. And the reason for taking these approvals and starting next year itself is we see that we will start hitting capacity constraints towards end FY'27. So we will have some capacity coming on stream in FY'28, which will play into the revenue and then it will ramp up and only towards the second half of FY'29 will all of the capacity be on stream. So actually, the full benefit of these capexes will be there in FY'30.

    — Gaurav Kumar

Profitability

  • Europe Operations Profitability Profitability · H2 FY27 onwards · Medium confidence definite boost
    we think there will be a definite boost up to the European Operations profitability with that.

    — Gaurav Kumar

Market Growth

  • Europe Market Growth Market Growth · long-term · High confidence 1-2%
    Long-term trend of the European market is generally a 1% to 2% growth. So that should remain.

    — Gaurav Kumar

Debt

  • Net Debt to EBITDA Debt · long-term · High confidence < 2.0x
    In our estimate, with a normalised industry scenario, we would still be below our long term stated goal in this vision period of below 2.0 net debt to EBITDA, even at the peak levels.

    — Gaurav Kumar

Tax Rate

  • Effective Tax Rate Tax Rate · effective FY27 · High confidence 25-26%
    Yes, Joseph, the tax team is examining and with the change, most probably we would be moving to that tax bracket.

    — Gaurav Kumar

ROCE

  • ROCE Target ROCE · long-term · Medium confidence 15%
    So our current year ROCE we are running at 13.5%. It is in the band where we had set out our targets, but still not reaching that 15% target where we wanted to be

    — Gaurav Kumar

Pricing

  • Price Increase (if RM stable) Pricing · every year · Medium confidence mid-single digit price increase
    I wish we had this nice stable scenario of RM remaining constant, but we would probably need to take a mid-single digit kind of price increase every year.

    — Gaurav Kumar

A&P Spend

  • A&P Spend as % of Sales A&P Spend · going forward (normalised scenario) · High confidence 2.5%

    Previously 2% → 2.5%

    In a normalised scenario, we would be upping it to about 2.5% to drive the top line growth and that is where it should settle as we go forward.

    — Gaurav Kumar

What to watch in Q4 FY26

A&P Spend as % of Sales

FY27
Current Elevated in Q3 FY26 due to BCCI activation
Target Normalization to ~2.5% from FY27

Why it matters

To assess if marketing expenses align with management's stated normalized levels and contribute to topline growth efficiently.

In a normalised scenario, we would be upping it to about 2.5% to drive the top line growth and that is where it should settle as we go forward.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Global events make predicting raw material prices difficult, with potential for rupee swings and impact on margins, though current outlook is flattish.

    Management acknowledged

  • Inflationary Pressures on Capex

    medium

    The higher capex per tonne for new capacity expansion is partly attributed to inflationary pressures.

    Management acknowledged

  • Muted Demand in Europe

    medium

    The demand environment in Europe continues to be weak across key categories, leading to flattish revenue growth.

    Management acknowledged

  • Near-term Profitability Impact from BCCI Sponsorship

    low

    The timing of the spend on the BCCI sponsorship has a near-term impact on profitability, which is expected to normalize from next year.

    Management acknowledged

Q&A highlights

8 direct
Capacity Increase Capex per Tonne Direct
The increase comes as a result of both the inflationary pressures, and you would see that our last big capex was back in FY 2021, and also because the technology keeps moving. The capacities that we have set up have always been state-of-the-art, not just catering to a small segment of the market. It caters to the global OEMs, both in India and also the overseas developed markets of Europe and U.S.

Analyst questioned the higher capex per tonne for the new expansion, and management explained it's due to inflation and advanced technology for global OEMs.

Asked by Raghunandhan NL

A&P Spend Normalization Direct
Q3 Raghu, would be an anomaly given that there was activation apart from the usual sponsorship fee, so it would have jumped up. We used to be roughly around 2% spend of A&P as a percentage of sales. In a normalised scenario, we would be upping it to about 2.5% to drive the top line growth and that is where it should settle as we go forward.

Management clarified the temporary nature of high A&P spend due to BCCI sponsorship and provided a normalized target for future A&P as a percentage of sales.

Asked by Raghunandhan NL

Debt Reduction Reflection in P&L Direct
It should start coming in because the long-term debt repayment was happening as per schedule, the big reduction was on some of the working capital borrowings as inventory reduction happened and that may have happened in the last one month or 45 days, so it will start reflecting fairly in the next quarter.

Analyst noted a discrepancy between reported debt reduction and interest outgo, prompting management to explain the timing of the impact on the P&L.

Asked by Basudeb Banerjee

Income Tax Rate Change Direct
Yes, Joseph, the tax team is examining and with the change, most probably we would be moving to that tax bracket. ... I think so. (effective FY27)

Management indicated a potential shift to a lower corporate tax rate (25-26%) from FY27, which could positively impact future PAT.

Asked by Joseph George

Rationale for Large Capex Direct
But we reached a stage where we could not further increase the capacity by line balancing and hence, any further increase in capacity needed civil. And the moment you reach that stage, it has to be of a certain quantum. ... it is better that we are transparent about the overall plan that is there in the mind as we kick off this capex.

Analyst questioned the shift to a large capex plan after years of smaller, bite-sized investments, and management explained it was necessitated by reaching full capacity utilization and the need for civil construction.

Asked by Joseph George

Europe Restructuring Benefits Direct
the Enschede plant in Netherlands will stop production end of June 2026, one quarter into FY'27. The transition of the various product categories to the plant in Hungary and India is already underway and we think that in second half of FY'27 you would start seeing the benefit of that flowing through. I would hold on to giving a margin guidance as we do not do across, but we think there will be a definite boost up to the European Operations profitability with that.

Analyst sought clarity on the timeline and impact of the Netherlands plant closure, with management confirming benefits from H2 FY27, boosting European profitability.

Asked by Kapil

Market Share Trends in PCR and TBR Direct
So, in terms of market share, we believe we have a very strong market share trend. In terms of market share, we believe we have either maintained or gained market share in the current quarter. So, some of that reversal has started. We still need to regain some of the lost ground on the PCR OEM side, Nitin.

Analyst inquired about market share recovery, particularly in PCR OEM where the company had previously lost ground due to low-margin bids, and management confirmed current gains and ongoing recovery.

Asked by Nitin Agrawal

Net Debt Trajectory with Large Capex Direct
We will take on some debt as we go through FY'27 capex and even FY'28. In our estimate, with a normalised industry scenario, we would still be below our long term stated goal in this vision period of below 2.0 net debt to EBITDA, even at the peak levels.

Analyst asked about the impact of the large capex on future debt levels, and management reassured that the company expects to remain within its long-term Net Debt to EBITDA target.

Asked by Mihir Vora

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Detailed narrative

Strong Q3 FY26 Performance

Apollo Tyres reported its highest-ever quarterly revenue, both on a standalone and consolidated basis, reaching INR 7,740 crores, a nearly 12% YoY growth. The consolidated EBITDA margin improved to 15.3%, up from 13.7% in the same quarter last year and 14.9% in the previous quarter. This performance was driven by robust demand in India and disciplined cost initiatives.

India Operations Lead Growth

India operations demonstrated strong performance with INR 5,140 crores in revenue, growing over 13% YoY, and an EBITDA margin of 14.5%. The domestic market saw robust double-digit growth across all channels and product categories, including OEM, replacement, and exports. The momentum was further boosted by a positive demand environment and reduced GST rates for the industry.

Europe Operations & Strategic Restructuring

Europe operations recorded flattish revenue at EUR 180 million, with an improved EBITDA margin of 17.9%. Despite a muted demand environment, the company's premium brand, Vredestein, achieved its highest-ever volumes. The PCR capacity expansion in Hungary is progressing as planned, and the Enschede plant in the Netherlands is scheduled to stop production by June 2026, with expected profitability benefits from H2 FY27.

Significant Capacity Expansion Approved

The Board approved a substantial capex of INR 5,800 crores for FY27-29 to expand PCR and TBR capacities at its AP plant. Approximately INR 3,000 crores is earmarked for overall capex in FY27, with FY28 potentially seeing even higher investments. This expansion, necessitated by current high capacity utilization in India (high 80s), aims to meet future demand and capitalize on growth opportunities, with revenue flow expected to begin in FY28 and full benefits by FY30.

Robust Balance Sheet & Debt Management

The company significantly strengthened its balance sheet, reducing consolidated net debt to INR 1,300 crores by December 2025, down from INR 2,600 crores in September 2025. This led to a consolidated Net Debt to EBITDA ratio of 0.4x, a substantial improvement from 0.8x. The reduction was primarily driven by strong operational cash flows and a decrease in short-term borrowings, with long-term debt repayments also on schedule.

Brand Building & Digitalization Initiatives

Apollo Tyres continues to invest in brand equity, notably through its sponsorship of the official Indian Cricket Team jersey, which has garnered extensive media attention and boosted brand reach and visibility, particularly in rural markets. On the digitalization front, the company is leveraging Artificial Intelligence to enhance customer service, improve plant efficiencies, and optimize costs.

Commitment to Sustainability & Product Excellence

The company received multiple accolades for its sustainability efforts, including the first prize in the 'Best Industry' category at the 6th National Water Awards for its Chennai plant. R&D initiatives continue to secure additional model approvals from marquee passenger vehicle manufacturers and achieve podium positions in independent European tests, reaffirming product competencies and supporting the premiumization strategy.

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