Apollo Tyres reported a strong Q3 FY26, achieving its highest-ever quarterly revenue on both standalone and consolidated bases, with consolidated topline growth near 12% and an EBITDA margin of 15.3%. Management highlighted robust double-digit growth across all domestic channels, contrasting muted demand in Europe. Key strategic announcements included the approval of a significant INR 5,800 crore capex plan spread over FY27-FY29 to expand core capacities in India.
Q3 FY26 Financial Performance Summary
Apollo Tyres concluded Q3 FY26 with strong financial results, driven primarily by momentum in the domestic market. Consolidated revenue for the quarter reached INR 77.4 billion, marking an almost 12% growth year-over-year (Y-o-Y). The consolidated EBITDA stood at INR 11.9 billion, resulting in an improved margin of 15.3%, up from 14.9% in the previous quarter.
Managing Director Neeraj Kanwar noted this was the highest ever quarterly revenue recorded. Furthermore, the company witnessed double-digit Y-o-Y growth in both standalone and consolidated revenue, the highest growth achieved over the last 12 quarters, boosted by a positive demand environment and reduced GST rates in India.
Segmental Highlights and Strategy Pillars
India Operations
The domestic front showed robust double-digit growth across all three product categories. Standalone revenue in India was INR 51.4 billion, a growth of over 13% Y-o-Y. EBITDA for India stood at INR 7.5 billion (14.5% margin). Replacement is noted as the most profitable category, with export margins generally being lower.
Management attributed strong brand pull to the Indian Cricket Team jersey sponsorship, which is delivering significant brand reach and visibility.
European Operations
In contrast, the European demand environment remained muted. Revenue for the quarter was Euro 180 million, which was flat Y-o-Y. However, the EBITDA margin improved substantially to 17.9% (from 12.7% last quarter). The UHP mix continued to advance, reaching 52%.
The restructuring plan for the Enschede plant in the Netherlands remains on track to stop production by the end of June 2026 (one quarter into FY’27), with benefits expected to flow through in the second half of FY’27.
Balance Sheet and Debt Reduction
The company achieved a sharp reduction in net debt. Consolidated net debt stood at INR 13 billion at the end of Q3, significantly lower than the INR 26 billion reported in the previous quarter, primarily due to strong operational cash flows reducing short-term borrowings. The consolidated Net Debt to EBITDA ratio dropped to 0.4x.
Strategic Capital Expenditure (Capex) Plan
Given current growth momentum and capacity utilization levels in India—in the high 80s for both PCR and TBR—the Board approved a major investment plan. The approved capex totals INR 5,800 crores spread across FY’27, FY’28, and FY’29 to expand both PCR and TBR capacities at the AP plant.
The initial growth capex in FY’27 is guided at about INR 2,000 crores. The overall consolidated capex for the next year (FY’27) is expected to be closer to INR 3,000 crores, including maintenance and the ongoing PCR expansion in Hungary. The full benefit of this expansion is expected by FY’30. Management noted the increased capex per tonne (estimated at INR 17 crore per metric tonne) reflects inflationary pressures and technology upgrades.
Outlook and Key Metrics
- Raw Materials: Raw material costs are expected to remain steady in Q4. Current prices cited were natural rubber at around INR 195 a kg.
- Pricing: Pricing in the replacement market has remained stable; no proactive pricing action was taken in Q3.
- Sponsorship Spend (A&P): A&P spend in Q3 was anomalous due to the activation of the BCCI sponsorship. Management targets a normalized A&P spend of about 2% to 2.5% of sales going forward.
- ROCE: Current year ROCE is running at 13.5%, below the target of 15%.
- Tax Rate: Management expects the standalone entity to move towards the 25% or 26% tax bracket effective FY’27 following recent budget changes.
Source: BSE
