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Apollo Tyres – Calibrated Capex Spends Amid Muted Margin Scenario Comforting, Retain Capital Efficiency Focus: ICICI Direct


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Apollo Tyres Ltd. retained its FY26 targets in terms of revenue ($5 billion), Ebitda margins (more than 15%), return on capital employed profile (12-15%) and leverage on balance sheet (net debt: Ebitda less than two).

However, it reiterated that it will not chase revenues at the expense of capital efficiency. Therefore, it refrained from committing any fresh growth capex given the prevailing pressure on margins and return ratios  Immediate aim is for sweating of assets, taking calibrated price hikes to augment margins and consequently improve return rations.

Apollo Tyres is taking industry leading price hikes (increase in quantum as well as more frequent) and is prepared for small market share loss for protecting profitability.

Gross margin pressure is expected to continue until Q2 FY23 versus the initial guidance for Q1 FY23, a key negative surprise from the meet.

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