Buy Apollo Tyres; target of Rs 600: Emkay Global Financial

Emkay Global Financial is bullish on Apollo Tyres has recommended buy rating on the stock with a target price of Rs 600 in its research report dated March 04, 2026.

Broker Research

March 04, 2026 / 12:04 IST

Buy

Emkay Global Financial' research report on Apollo Tyres

We met the management of APTY. KTAs: 1) Demand is strong, with double-digit YoY growth across channels and segments in Q4, triggered by recent GST cuts; outlook for FY27 also appears healthy. 2) RM prices are expected to be flattish QoQ in Q4FY26, with ~3% rise expected in Q1FY27. 3) Tight demand–supply dynamics should support tyre makers’ pricing power; APTY has already taken certain price hikes in Jan-26 (0.6%/1.5% in PCR/LTR); similar actions are also visible across peers. 4) The management continues to target 14-15% margin for its standalone business despite rising RM costs, supported by calibrated price hikes, lower discounting, and an improved product mix; Q4 margin might witness compression due to sponsorship-related spends being concentrated in Q3/Q4; it reiterated its 15% long-term RoCE target. 5) Over the past few quarters, the tyre industry has refrained from price cuts despite softer RM, reflecting improved pricing discipline and sharper profitability focus (refer to: Tyre demand-supply tightening; focus on margin sharpens). 6) While APTY has announced capacity addition (Rs58bn), the capacities would come onstream only by end-FY28/FY29 (on normal 2-3-year gestation period); FY27 demand would be supported via 4k PCR tyres/day each in India and Hungary and supplemented by outsourcing. 7) Capacity expansion in EU will be limited, with increased exports from India. 8) The Netherlands plant closure and shift of manufacturing from Hungary to India will reduce conversion cost, raise margin (200-300bps in FY28; near-term pressure in H1FY27 due to transition, with stabilization from H2FY27).

Outlook

We build in 8%/14/24% revenue/EBITDA/EPS CAGR over FY26-28E; retain BUY with TP of Rs600, at 17x Dec-27E PER.

For all recommendations report, click here