Apollo Tyres Ltd: Stock Analysis

Apollo Tyres Ltd., with its headquarters in Gurugram, India, is one of the world’s largest tire producers. It has built a reputation of reliability and trust over generations to provide customers with value through its products and services. How did it achieve this level of growth? The company was founded in 1972 and has revenues of US$2.3 billion. Its goal for the Financial Year 2026 is US$ 5 billion. The company has 100 customers in different countries. In 1975, the company opened its first plant in Perambra in Thrissur in Kerala, India. It has seven production units today, five of which are in India and the other two in the Netherlands and Hungary. Andhra Pradesh is getting a new plant. In India and The Netherlands, two Global R&D Centers have been established.

Apollo Tyres Ltd: Business Model

The company’s revenue is US$ 2.3 Billion, 67% from APMEA (Asia Pacific/Middle East/Africa), 30% from Europe, and 2% from other.

The company sells its products under two main brands, Apollo and Vredestein (or Maloya). These are available via an extensive network of exclusive and branded outlets and dealerships. The company’s product range includes tires and wheels for light trucks, passenger cars, commercial vehicles, off-highway vehicles, as well as tires on two-wheelers.

Apollo Tyres launched the Virat range of agricultural tires and announced its Digital Innovation Hub launch in London for AI, ML, and data mapping in London. It also partnered with Tata Motors to deploy EV charging stations and is the most-sold tire within the PV segment.

Since 1975, the company has expanded in India and overseas. JK Tyres & Inds is one of the company’s most important competitors. Others include CEAT Ltd., MRF Ltd., and Balkrishna Industries Ltd. Its low prices and aggressive pricing strategy allow it to outperform its competitors. It also provides the right product at the right time through its vast distribution presence on the market.

Company Analysis

Apollo Tyres Ltd. has the following essentials for its business as of May 2022 (NSE: APOLLOTYRE; BSE:500877; Sector: Tyres & Allied):

In its investor presentation, Apollo Tyres Ltd. reported a drop in revenue of 60% Year-on-Year (YoY). The profit for the fourth quarter of Financial Year 2022 was 113,5 million dollars. The net profit for the entire year was Rs. The net profit for the whole of the year was Rs. The previous financial year saw 3,502 Mn. The price earning (P/E), i.e., the price that investors are willing to pay per rupee earned, is 53.24. This is a high ratio. The promoter holding percentage is stable at 37.34 % in March 2022.

The company’s revenue grew by 11% in the fourth quarter of its financial year (2022) and 20% in the full year, mainly due to a strong demand in Europe. However, India saw a lower growth rate. The company has good Cash Flow Management, a high level of operating leverage, and an efficient Cash Conversion cycle.

The margins for Earnings Before Interest, Taxes, Depreciation, and Amortisations (EBITDA), at 11.2%, were lower because of higher raw material and energy prices. Over the last three years, it has shown poor profit growth (5.11%), poor revenue growth (4.43%), and a low Return on Equity(ROE).

The company has been leading the way in price increases of between 4% and 7% in the Truck and Bus Radial segment (TBR), as well as in the Agricultural and Industrial segments. It doesn’t care about sacrificing some market share to achieve profitability. The company’s demand in Europe is strong, and it is constantly expanding and improving the contribution of the Ultra High Performance (UHP) and Ultra-Ultra High Performance (UUHP) segments. This segment accounted for 43% in FY22 of Passenger Car Light Truck (PCLT) volume sales (40% in FY21).

Due to the unprecedented conditions in India, the company has decided not to increase its CAPEX (Capital Expenditures).

Strengths and risks

The company was ranked 80th in the list of Best Companies to Work for in 2021 and received various awards for Corporate Social Responsibility in the category ‘Health Enhancement’ for its HIV/AIDS awareness and prevention program, as well as for outstanding work in Health Care 2020 and exemplary work for women empowerment in Gujarat.

The impact of external factors like the Ukraine/Russia war and inflation, as well as the recent rate increase by the RBI, is affecting the profitability of tire manufacturers. About two-thirds of the cost of tire manufacturing is accounted for by crude and crude derivatives and rubber. It reported a healthy operating performance in 4QFY22 despite the cost push.


The company’s Q4FY22 performance was great but not spectacular. There were significant improvements in the European business while the standalone (Indian operations) suffered and required a little boost.

It believes that as a philosophy of the brand, it should give customers choices to help them feel comfortable and in control. This will allow them to conquer the road. Apollo’s tagline, “Go the distance,” helps customers realize their potential in driving as well as in other areas of life. It is moving forward with excellence and progress towards its revenue target of FY-2026.

Leave a Reply

Your email address will not be published. Required fields are marked *