Geojit turns bullish on Apollo Tyres, upgrades to 'Accumulate'; check why

Geojit Investments has turned bullish on Apollo Tyres, upgrading its rating to 'Accumulate' from 'Hold,' following a positive management conference call. The brokerage noted that the company expects improved operating performance, driven by a recovery in demand and continued cost optimisation initiatives.

 

The brokerage has set a target price of ₹548 for Apollo Tyres, based on a 17 times forecasted earnings per share (EPS) for FY27. As of 1 PM on Thursday, January 1, 2026, the stock was trading at ₹495.25, down 0.95 per cent from its previous close of ₹500.

Key concall highlights

Among the key takeaways from the concall, Geojit highlighted that the company’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin from its Indian operations increased by 321 basis points (bps) Y-o-Y to 15.3 per cent, while the European margin decreased by 213 bps Y-o-Y to 12.7 per cent in Q2FY26.

 

 

The company is increasingly shifting towards premium products, with the Ultra High Performance (UHP) tyre segment accounting for 49 per cent of its mix in Q2FY26, up from 46 per cent in Q2FY25. Apollo Tyres is also on track with its PCR capacity expansion in Hungary, which is expected to accelerate demand.  ALSO READ | Steel Strips Wheels shares soar 8% on highest-ever monthly sales 

Geojit further pointed out that overall volumes in India grew by 4 per cent, driven primarily by demand in the farm segment, two- and three-wheelers, and other categories, while growth in the truck and passenger car segments remained subdued. Additionally, raw material costs declined 3 per cent sequentially in Q2FY26 and are expected to remain stable or slightly softer in Q3FY26, which will further support margins.

 

The brokerage also noted that the company’s Enschede plant shutdown in the Netherlands is expected to be completed by the end of June 2026, incurring an exceptional cost of EUR 17 million in Q2FY26.

GST reforms, premiumisation driving growth

According to Geojit, the company’s revenue growth in Q2FY26 was driven by GST reforms in India and a recovery in exports. Product premiumisation remains a key focus, with Apollo Tyres continuing its dual-brand strategy in the passenger car radial (PCR) segment, delivering ongoing benefits.

 

The brokerage expects an uptick in domestic demand, particularly in the replacement segment across various categories. Apollo Tyres is also optimistic about maintaining and accelerating top-line growth in both India and Europe.  ALSO READ | M&M, Ashok Leyland: Auto index hits new high as OEMs report Dec 2025 sales 

“Apollo Tyres aims to complete the Enschede plant closure by June 2026, which is expected to positively impact profitability in its European operations. The raw material situation is stable and is not expected to weaken further,” the brokerage said in its report.

 

Looking ahead, Geojit expects operating performance to continue improving, supported by demand recovery and ongoing cost optimisation efforts.  ==================

 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)