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Commodity inflation may outpace price hikes
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Apollo Tyres Limited — Q4 FY26
Apollo Tyres reported a strong Q4 FY26 with consolidated revenue of ₹7,340 crore (+14% YoY) and EBITDA margin of 14.6% (+160bps YoY).
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Apollo Tyres reported a strong Q4 FY26 with consolidated revenue of ₹7,340 crore (+14% YoY) and EBITDA margin of 14.6% (+160bps YoY). India operations drove growth with high-teens volume growth in replacement and OE, while Europe remained muted with revenue down 1% YoY. The company announced a ₹3,500 crore capex for FY27, with 80% towards capacity expansion. However, raw material costs are expected to rise mid-to-high teens sequentially in Q1 FY27, prompting price hikes of 6-8% already announced, with more needed. The closure of the Enschede plant is on track, with a non-cash write-off of €43 million. Key risk: sustained commodity inflation could pressure margins if price hikes lag, especially given volatile geopolitical conditions in West Asia.
अपोलो टायर्स ने वित्त वर्ष 2026 की चौथी तिमाही में मजबूत प्रदर्शन किया। कंपनी की कुल कमाई ₹7,340 करोड़ रही, जो पिछले साल से 14% ज्यादा है। कमाई पर खर्च घटाने के बाद बचत (EBITDA मार्जिन) 14.6% रही, जो पिछले साल से 1.6% बेहतर है। भारत में बिक्री तेजी से बढ़ी, जबकि यूरोप में कमाई 1% घटी। कंपनी ने अगले साल ₹3,500 करोड़ का निवेश करने की योजना बनाई है, जिसमें 80% क्षमता बढ़ाने पर खर्च होगा। लेकिन कच्चे माल की कीमतें बढ़ने वाली हैं, इसलिए कंपनी ने 6-8% कीमतें बढ़ाने का ऐलान किया है। एनशेडे प्लांट बंद करने का काम जारी है, जिससे €43 करोड़ का गैर-नकद घाटा होगा। मुख्य जोखिम: अगर कीमतें नहीं बढ़ाई गईं तो मुनाफा कम हो सकता है, खासकर पश्चिम एशिया में अस्थिरता के कारण।
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India standalone revenue
₹5,240 crore
+14.3% YoY
India revenue grew 14.3% YoY to ₹5,240 crore, driven by strong volume growth in replacement and OE.
Europe revenue
€170 million
-1% YoY
Europe revenue declined 1% YoY due to muted market conditions and supply issues from India.
Capacity utilization
90%
flat
Capacity utilization remained high at 90% across India and Europe, limiting ability to meet demand.
Net debt to EBITDA
0.4x
-2.8x YoY
Net debt to EBITDA improved from 3.2x to 0.4x, reflecting strong cash flow and deleveraging.
What Changed vs Last Quarter
NEW
Price hikes of 6-8% in Q1 FY27, more needed
Price increases of 6-8% announced for Q1 FY27, with at least two more rounds required to offset raw material cost inflation.
NEW
Europe margins to improve in H2 FY27 post restructuring
Positive impact on European margins expected from H2 FY27 after Enschede closure and stabilization.
NEW
Raw material costs to rise mid-to-high teens sequentially in Q1
Raw material costs expected to increase mid-to-high teens in Q1 FY27 vs Q4 FY26, with further pressure possible in Q2.
UPDATED
FY27 capex of ₹3,500 crore, 80% for growth
Capex of ₹3,500 crore planned for FY27, with nearly 80% allocated to capacity expansion in India and Hungary.
DROPPED
Capex of ₹5,800 crore for Andhra plant over FY27-29
Board approved ₹5,800 crore capex for expanding PCR and TBR capacities at the Andhra plant, spread over three financial years.
DROPPED
A&P spend to normalize to 2.5% of sales by FY27
Elevated A&P spend in Q3 (₹150 crore) will normalize to about 2.5% of sales in a steady state from FY27 onwards.
NEW RISK
Commodity inflation may outpace price hikes
Raw material costs rising mid-to-high teens sequentially, with only 6-8% price hikes announced; further increases needed but timing uncertain.
NEW RISK
Geopolitical volatility in West Asia
Geopolitical developments add uncertainty to raw material, energy, and logistics costs, potentially impacting margins further.
NEW RISK
Demand slowdown from price and fuel increases
Analyst raised concern that price hikes and diesel price increases could impact fleet operator profitability and demand in H2 FY27.
NEW RISK
Europe revenue loss from Enschede closure
Closure of Enschede plant may result in loss of agricultural tire OE business, estimated at ~5% of Europe revenue.
RISK GONE
Raw material cost volatility
International commodity prices and currency fluctuations could increase raw material costs, pressuring margins. Management noted flattish outlook but acknowledged unpredictability.
RISK GONE
Elevated A&P spend impacting near-term margins
Q3 A&P spend was ₹150 crore (elevated due to BCCI sponsorship activation), and Q4 will also be high, delaying margin normalization to FY27.
RISK GONE
Europe demand remains weak
European market growth was negative (-4% for PCR), and recovery is uncertain, limiting topline growth in that region.
RISK GONE
High capex cycle may pressure return ratios
The ₹5,800 crore capex over FY27-29 will increase debt and depreciation, potentially delaying RoCE improvement towards the 15% target.
Fast read
Guidance and risk preview
Capex of ₹3,500 crore planned for FY27, with nearly 80% allocated to capacity expansion in India and Hungary.
Raw material costs rising mid-to-high teens sequentially, with only 6-8% price hikes announced; further increases needed but timing uncertain.
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