ICICI Securities's research report on Apollo Tyres
Apollo Tyres (APTY)’s Q2FY26 operating performance beat our estimate. Decline in RM basket drove strong margin improvement. Domestic replacement demand is expected to pick pace going ahead. OE segment, which was declining for APTY owing to product portfolio revamp (shifting to larger rim sizes), has stabilised and may start seeing recovery going forward. Capacity addition could support growth in international markets. Benign RM basket is expected to support healthy margin performance in the near term. Restructuring of EU operations is likely to structurally improve profitability for APTY from FY27 onwards.
Outlook
We increase our EPS for FY26–28E by 1-4% owing to better-than-expected margin performance. Maintain BUY with a revised TP of INR 620 (earlier INR 615), based on 15x FY27E EPS.
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