Buy Apollo Tyres; target of Rs 554: Motilal Oswal

Motilal Oswal is bullish on Apollo Tyres has recommended buy rating on the stock with a target price of Rs 554 in its research report dated May 15, 2025.

Broker Research

May 23, 2025 / 12:28 IST

Buy

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Motilal Oswal research report on Apollo Tyres

APTY’s 4QFY25 earnings, although in line with our estimates, have been below par compared with peers. Consolidated PAT (adjusted for one-offs) declined 42% YoY to INR 2.7b (in line) due to a 420bp decline in EBITDA margin to 13% (in line). APTY is implementing corrective measures to address its underperformance and is confident of improving its performance from 1QFY26 onward.

Outlook

After a weak performance in FY25, which was largely impacted by a sharp rise in input costs, we expect APTY’s margins to gradually revive, aided by softening costs and its focus on premiumization. We have factored in a 130bp expansion in APTY’s margins over our forecast period, driving a 25% PAT CAGR over a corrected base. Valuations at 15.6x FY27E appear attractive, especially when compared to peers. We reiterate our BUY rating on APTY with a TP of INR 554 (valued at 18x FY27E consol. EPS).

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