Apollo Tyres reports 13% revenue jump in Q1 on strong Indian demand

Indian tire giant Apollo Tyres posted a 12.8% year-on-year revenue increase in the first quarter of fiscal 2026-27, driven by record demand in its domestic market. For the three months ended 30 June, consolidated revenue rose to INR74 billion (€670 million), up from INR65.6 billion a year earlier, while operating profit remained flat at INR8.7 billion, the company revealed in an earnings call on 6 August. The growth came despite a “challenging macroeconomic environment” and a 17% surge in raw material costs. Apollo’s Indian operations delivered record revenue of INR54.6 billion, a 15.6% year-on-year increase and 4.3% sequentially, according to outgoing finance chief Gaurav Kumar. The growth was “largely volume-led,” with double-digit volume increases across all major channels except truck and bus bias tires. Replacement volumes climbed 13% year-on-year, OEM volumes rose 10%, and exports grew 15%. All product categories saw double-digit growth except truck and bus bias tires. EBITDA for the Indian business fell 12% to INR6.5 billion due to higher raw material costs, but Apollo said it “largely successfully defended margins” through price hikes and cost controls. India’s strong demand has pushed Apollo’s capacity utilization “in the 90s,” with tight capacity expected to persist through fiscal 2027. The company is expanding passenger car tire capacity at its Andhra Pradesh plant by around 8,000 tires per day and adding 4,000 tires per day in Hungary. “The financial market had thought that some of our expansion plans are aggressive, but [with] the kind of demand that we’ve seen in India… if anything, we are a quarter late than early,” Kumar said. In Europe, revenue edged up 0.5% year-on-year to €147 million, with volumes growing by low single digits. Apollo’s European business continues to grapple with the fallout from the closure of its Enschede plant in the Netherlands. The PCR replacement segment delivered healthy growth, with double-digit increases “well ahead of the market.” However, the transition has caused revenue losses in agri tires and truck radial segments due to capacity shifts between Hungary and India. Apollo expects European growth to rebound as these transfers are completed. The Enschede plant ceased production in June, with some lower-end passenger car tires moving from Hungary to India. Kumar noted that roughly 750,000 tires previously made in Enschede would shift to Hungary, while lower-end 14- and 15-inch tire production from Hungary would relocate to India. Looking ahead, raw material inflation remains a concern, with Apollo forecasting an additional 8% sequential increase in raw material costs in Q2. “Commodity prices are likely to remain volatile until the geopolitical situation in West Asia [Middle East] stabilises,” Kumar warned.