Is Apollo Tyres Positioned for a Stronger H2 as Margins Improve Despite Mixed EU Trends?
About Apollo Tyres and Its Global Operating Landscape
Apollo Tyres ranks among India’s largest tyre manufacturers with a diversified geographic footprint across India, Europe and the ASEAN region. The company operates in both OEM and replacement segments, with an expanding presence in premium passenger-car radials, commercial-vehicle tyres and global aftermarket networks. Its cost structure benefits from stable raw-material prices, strong domestic demand and a leaner European operating model. This post consolidates all available brokerage views and operating indicators into one unified analysis of Apollo Tyres heading into H2 FY26.
The second quarter of FY26 reflected a balanced performance for Apollo Tyres with strong domestic margin expansion offsetting softness in its European business. Management commentary and brokerage notes highlighted that India demand remained favourable, driven by replacement demand stability and healthy OEM traction. EU trends were weaker due to adverse operating leverage, but analysts suggest that the India franchise continues to be the core driver of earnings momentum.
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Brokerage Highlights on Q2 Margins, Demand Trends and Recovery Visibility
CLSA maintained a ‘High Conviction Outperform’ rating and raised its target price to ₹650 from ₹586. It noted that margin improvement continues in Q2, with optimism around H2 demand and profitability. Domestic gross margin recovery was encouraging, although European profitability weakened due to adverse leverage.
Nuvama reiterated constructive macro positioning for tyre manufacturers and lifted Apollo Tyres’ target price to ₹600. It observed that Q2 volumes were ahead of expectations, supported by better mix and strong replacement-led momentum.
Citi echoed a similar trend, raising the target price to ₹650 and highlighting improving domestic margins as a pivotal factor. EU weakness was flagged, but the overall earnings trajectory remained encouraging.
Collectively, brokerages see a favourable cost environment, improved domestic execution and a recovery-led margin setup through the next two quarters.
The domestic revenue mix continues to drive stability as commodity prices remain benign. Management guidance indicates ongoing improvement in demand across the replacement tyre market, which is typically a high-margin segment for Apollo Tyres.
Peer Comparison Across Tyre Manufacturers
Domestic strength remains the defining advantage, enabling Apollo Tyres to counterbalance volatility in its overseas operations.
Strengths & Weaknesses
While near-term EU conditions weigh on consolidated numbers, India’s high-margin business continues to support the overall trajectory.
Opportunities & Threats
Apollo Tyres’ near-term setup shows a strong domestic-led recovery curve, partially moderated by external headwinds in global markets.
Valuation & Investment View
Brokerages remain constructive, with multiple target price upgrades reflecting renewed confidence in margin expansion and domestic sales resilience. While European weakness limits aggressive upside, strong replacement demand, favourable industry structure, and cost efficiency place the company in a stable earnings trajectory through H2 FY26. Apollo Tyres’ consolidated performance is expected to improve sequentially as domestic tailwinds offset EU softness.
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Investor Takeaway
Apollo Tyres stands on a firmer domestic footing with expanding margins and strengthening replacement demand. EU weakness is a near-term drag, but the broader structural story remains intact. The company’s diversified product mix, improved cost position and favourable brokerage sentiment suggest a steady outlook moving into FY26–27. Investors should focus on EU volume recovery, raw-material stability and the momentum of domestic demand.
This analysis is prepared under the guidance of Derivative Pro & Nifty Expert – Gulshan Khera, CFP®. Explore deeper market insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
