Apollo Tyres Limited — Q4 FY26 earnings call

Call held 15 May 2026

Management summary

Apollo Tyres delivered a robust Q4 FY26, with consolidated revenue growing nearly 14% and EBITDA margin expanding to 14.6%, primarily driven by strong performance in India. The company significantly strengthened its balance sheet, reducing net debt to EBITDA to 0.4x. While Europe faced slow growth and geopolitical headwinds impacted international markets, management is implementing price increases to counter rising raw material costs and expects margin improvement post-restructuring of the Enschede plant.

Highlights

  • Consolidated Q4 revenue grew by nearly 14% Y-on-Y to INR 73.4 billion, reflecting healthy double-digit growth.

  • Consolidated Q4 EBITDA margin expanded to 14.6% from 13% in the same period last year.

  • Net debt to EBITDA dramatically improved from 3.2 times in March 2020 to 0.4 times in March 2026, indicating strong financial health.

  • FY26 consolidated ROCE stood at 13.4%, an improvement of around 240 basis points compared to FY25.

  • India operations saw strong double-digit growth in both replacement and OE markets, with Q4 revenue at INR 52.4 billion, up 14.3% Y-on-Y.

Concerns

  • Europe operations witnessed slow, low single-digit growth in volumes.

  • Geopolitical developments in West Asia created significant uncertainty and added volatility to raw material, energy, and logistics costs, impacting international markets.

  • Raw material costs are expected to rise in high teens on a sequential basis in Q1 FY27, leading to margin pressure.

  • A non-cash write-off of EUR 43 million was taken in Q4 FY26 related to the Enschede plant closure.

  • A cash outflow of EUR 50 million for social plan payout related to the Enschede plant closure is expected in FY27.

Key financials

  1. Consolidated Revenue ₹73,400 Cr +14%YoY
  2. Consolidated EBITDA ₹10,700 Cr
  3. Consolidated EBITDA Margin 14.6%
  4. Full Year Revenue Growth — +9%YoY
  5. Full Year EBITDA Margin 14.6%
  6. ROCE 13.4%

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 MarginEBITDA
India Operations₹52,400 Cr14.6%₹7,600 Cr
Europe Operations₹170 Cr14.6%₹25 Cr
Reifencom₹40 Cr2%—

Capital allocation

high confidence
  • Capex ₹35,000 Cr
    • Growth and capacity expansion ₹28,000 Cr
    • India capacity expansion (truck and car tyres) ₹30,000 Cr
    • Europe (Hungary plant passenger car tyre expansion)
    For FY'27, we have outlined a CapEx of INR 35 billion, with nearly 80% towards growth and capacity expansion projects.
  • Debt 0.4× EBITDA
    On a consol level, our net debt to EBITDA ratio has significantly improved from 3.2 times multiple to 0.4 times in 2026 March
  • Liquidity Liquidity disclosed Balance sheet remains very strong, providing ample financial strength to navigate future uncertainties.
    Importantly, our balance sheet remains very strong, and despite the turbulent macro environment witnessed over the last several years, we have continued to improve our leverage profile.

Guidance & targets

Capex

  • Total CapEx Capex · FY27 · High confidence INR 35 billion
    For FY'27, we have outlined a CapEx of INR 35 billion, with nearly 80% towards growth and capacity expansion projects.

    — Gaurav Kumar

Tax Rate

  • India Applicable Tax Rate Tax Rate · FY27 · High confidence 25%

    From 34% today

    With this transition, our applicable tax rate reduces from 34% to 25%, and consequently, our deferred tax liabilities have provided a positive net impact of almost INR 570 plus crores and has been recognised in the P&L during the year as reflected in the net profit.

    — Gaurav Kumar

  • Europe Tax Rate Tax Rate · going forward · High confidence 20%
    About 20%.

    — Gaurav Kumar

  • Blended Tax Rate (Europe + India) Tax Rate · going forward · High confidence 20% (Europe) and 25% (India)
    Okay. So blended now would be like 20% for Europe and 25% for India going forward. That's correct.

    — Gaurav Kumar

Margin

  • Europe EBITDA Margin Margin · long-term (normalized scenario) · Medium confidence 16%
    We definitely believe that in a normalised scenario, we will get back to a 16% which was our earlier normal, and in fact, we believe we can even surpass that.

    — Gaurav Kumar

Operating Expense

  • A&P Spends as % of Sales Operating Expense · going forward · Medium confidence 2.5% plus

    From 4% today

    Going forward, we would expect, as growth kicks in, etc., for it to be around a 2.5% plus of sales.

    — Gaurav Kumar

Pricing

  • Europe Price Increase Pricing · current · High confidence 2%
    We've announced a 2% price increase in Europe also, Vijay.

    — Gaurav Kumar

  • India Price Increase Pricing · Q1 FY27 · High confidence 6% to 8%
    And we have already announced price increases of 6% to 8% for this current quarter.

    — Gaurav Kumar

What to watch in Q1 FY27

Raw material cost trends

next quarter
Current Expected to rise in high teens sequentially in Q1 FY27
Target Stabilization or moderation of cost increases

Why it matters

Directly impacts gross margins and the need for further pricing actions.

Raw material costs are expected to rise in high teens on a sequential basis. And we have already announced price increases of 6% to 8% for this current quarter. More price increases would further be needed.

Risks & concerns

  • Raw material cost inflation

    high

    Expected to rise in high teens sequentially in Q1 FY27, necessitating further price increases to offset margin pressure.

    Management acknowledged

  • Geopolitical developments in West Asia

    medium

    Creates significant uncertainty and adds volatility to raw material, energy, and logistics costs, impacting international market growth.

    Management acknowledged

  • Impact of price increases on demand

    medium

    While current demand is strong, sustained inflation and price hikes could impact new vehicle purchases and fleet operator profitability in H2 FY27.

    Analyst acknowledged

  • Slow growth in Europe

    medium

    Europe operations witnessed slow, low single-digit volume growth due to sluggish market conditions, high energy costs, and salary inflation.

    Management acknowledged

  • Competition in Europe

    low

    Apollo Tyres is a follower in Europe, and competition has not yet announced price increases following Apollo's 2% hike.

    Management acknowledged

Q&A highlights

6 direct
Volume growth breakdown for India operations in Q4 FY26 Direct
So Raghu, as mentioned, for both OE and replacement, the volume growth was high teens. Exports were impacted by events through the year. So the overseas markets were muted. We had mid-single-digit growth in the export volumes and a high teens in both OE and replacement. And to your second part of the question, TBR replacement, PCR replacement, for this quarter, we had 20% plus growth. OEM, TBR 20% plus PCR single digit.

Provides specific volume growth figures for different segments (OE, replacement, TBR, PCR) and export performance, clarifying the drivers of India's strong growth.

Asked by Raghunandhan NL

Market share movement in replacement segment for FY26 Direct
For the full year, we believe we have gained market share in TBR replacement and even in TBR overall. Passenger car replacement, we would have gained share, not in passenger car OEM. But that are our internal estimates.

Indicates the company's competitive position and market share gains in key replacement segments, based on internal estimates.

Asked by Raghunandhan NL

Commodity inflation outlook and required price hikes Direct
Siddharth, currently, the situation is very volatile, as all of us are experiencing in our different industries, et cetera. Mid to high teens is the current reality. It can change because the situation, even as we have progressed, about a month and a half into the quarter, has kept changing. The current estimate is around mid to high teens. We've taken about half the price increase that is needed. So at least a couple of more rounds of price increases would be needed to negate all the cost push that is there.

Highlights the significant raw material cost inflation expected in Q1 FY27 and the necessity for further price increases beyond the already announced 6-8% to maintain margins.

Asked by Siddhartha Bera

Impact of Enschede plant restructuring on European margins Direct
Siddharth, the last day for the Enschede plant would be June 30th, which has been a tough, difficult, emotional decision for us. Take about another quarter as we stabilise things. So in H2 of FY'27, the positive impact of margins as we become more cost competitive for our European operations should start flowing in.

Provides a timeline for when the benefits of the Enschede plant closure and restructuring are expected to positively impact European margins, indicating H2 FY27 as the inflection point.

Asked by Siddhartha Bera

Flexibility of the INR 5,800 crore CapEx plan given potential demand slowdown Partial
There is some flexibility, Joseph. But as I mentioned, as we saw in Q4, our capacity utilisation were already 90%. Through April, we struggled in terms of keeping up with the demand. So right now, we would definitely be going ahead as per our CapEx plans. If we see slowing down, we would have some flexibility for FY'28. FY'27 would largely be committed.

Clarifies the commitment level to the announced CapEx, indicating flexibility for FY28 but firm plans for FY27 due to high capacity utilization and strong demand.

Asked by Joseph George

Impact of rupee depreciation and India's low-cost production on exports to Europe Direct
So under the transfer pricing regulation, Joseph, for our European Operations, particularly, India can only retain a fixed margin. So as a step a standalone entity, it would not get the benefit. The overall group would benefit by the devaluation of the rupee. On your second question, yes, definitely, if you see the quantum of capacity increase in Hungary versus India are very different. And we will continue to leverage and take advantage if the India cost structure becomes even more cost competitive for serving not just Europe, but even other export markets.

Explains how currency movements and India's cost advantage benefit the overall group for exports, despite transfer pricing limitations for the standalone entity, highlighting strategic leverage of Indian production.

Asked by Joseph George

Revenue decline in Europe and the 'other operating income' component Direct
Sure. So, Vijay, as I mentioned, we in fact had a volume growth and given the raw material trend in Q4, there was a overall price mix. So the revenue decline from pure sales, etc., was 1%. The balance 2% which is contributing to the 3% overall decline is the other operating income. We had received state aid from Hungary/ EU, when we set up the plant. And we met all our commitments as of the end March '25. But as those assets move to India, the TBR assets, some of that other operating income, which was being amortised and accrued, because the benefit was over 10 years, has to be moved out of Hungary. And that's why you see the drop vis-a-vis the similar quarter last year.

Clarifies the components of Europe's revenue decline, attributing 2% to a non-recurring 'other operating income' related to the amortization of state aid for TBR assets moved from Hungary to India, which will reduce going forward.

Asked by Vijay Pandey

3 min read 6 chapters

Detailed narrative

Strong Q4 and FY26 Consolidated Performance

Apollo Tyres reported a strong Q4 FY26, with consolidated revenue reaching INR 73.4 billion, marking a nearly 14% year-on-year growth. The consolidated EBITDA margin for the quarter stood at 14.6%, an improvement from 13% in the prior year. For the full fiscal year 2026, the company achieved a consolidated top-line growth of 9% Y-on-Y, maintaining an EBITDA margin of 14.6%. This performance underscores the company's ability to deliver healthy growth and profitability despite a challenging macroeconomic environment.

Robust India Operations and Tax Regime Transition

India operations demonstrated robust performance in Q4 FY26, with revenue of INR 52.4 billion, growing 14.3% Y-on-Y. The EBITDA margin for India stood at 14.6%, significantly up from 11.2% in the same period last year. Volume growth in both OE and replacement segments was in the high teens, with TBR and PCR replacement growing over 20%. The company also announced a transition to the concessional tax regime effective FY27, which will reduce its applicable tax rate from 34% to 25%, resulting in a positive net impact of INR 570+ crores from deferred tax liabilities.

Challenges and Restructuring in Europe Operations

Europe operations faced a slow, low single-digit volume growth in Q4 FY26, with revenue at EUR 170 million, down 1% Y-on-Y. Despite this, the EBITDA margin improved slightly to 14.6% from 14.3% last year. The company is in the process of closing its Enschede plant, incurring a non-cash write-off of EUR 43 million in Q4 FY26. Management expects the positive impact on European margins from this restructuring to start flowing in H2 FY27, aiming for a normalized margin of 16%.

Raw Material Headwinds and Proactive Pricing Actions

The company anticipates raw material costs to rise in high teens on a sequential basis in Q1 FY27, driven by volatility from geopolitical developments. To mitigate this pressure, Apollo Tyres has announced price increases of 6% to 8% for the Indian market in Q1 FY27, with 3-5% already implemented. In Europe, a 2% price increase has been announced. Management indicated that further price hikes would be necessary to fully offset the expected cost push, as current increases cover only about half of the needed adjustment.

Strategic Investments in R&D, Digital, and Brand

Apollo Tyres continues to invest strategically across key pillars. In R&D, the company secured fresh OEM approvals from leading manufacturers like BMW, MINI, Genesis, KIA, and Mahindra, and introduced upgraded premium products. Digital initiatives include the rollout of a new B2B e-commerce platform in Europe and scaling AI for efficiency and cost optimization, earning recognition from Amazon Web Services. Brand building efforts, such as the BCCI partnership and 'Har Safar Mein Dum Hai' campaign, have strengthened brand equity.

Strengthened Balance Sheet and Capital Expenditure Plans

The company's balance sheet remains very strong, with the consolidated net debt to EBITDA ratio significantly improving from 3.2 times in March 2020 to 0.4 times in March 2026. India's net debt to EBITDA also improved from 1.1x in March 2025 to 0.7x in March 2026. For FY27, Apollo Tyres has outlined a CapEx plan of INR 35 billion, with approximately 80% allocated towards growth and capacity expansion projects, including INR 3,000 crores for truck and car tyre capacity expansion in India.

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