APOLLOTYRE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:14 pm

Fundamental Rating: 3.6

📊 Core Financials:

- Profitability: PAT improved from 223 Cr. to 279 Cr. (+66.8% QoQ), showing strong earnings momentum.

- Margins: ROCE at 9.80% and ROE at 6.28% are modest, reflecting average efficiency.

- Debt: Debt-to-equity at 0.31 → moderate leverage, manageable but requires monitoring.

- EPS: 12.2 ₹, relatively low compared to valuation.

💹 Valuation Indicators:

- P/E: 41.5 vs Industry PE of 31.0 → trading at a premium.

- P/B: 505 ₹ / 170 ₹ ≈ 2.97, moderate premium to book value.

- PEG Ratio: 1.10 → fairly valued relative to growth.

- Intrinsic Value: Estimated fair value ~460–480 ₹, suggesting current price is slightly overvalued.

🏢 Business Model & Competitive Advantage:

Apollo Tyres operates in tyre manufacturing, serving automotive OEMs and replacement markets globally. Competitive advantage lies in brand recognition, diversified product portfolio, and global presence. However, profitability ratios remain modest compared to peers, limiting valuation appeal.

📈 Entry Zone & Long-Term Guidance:

- Entry Zone: Attractive accumulation range between 460–480 ₹.

- Long-Term Holding: Suitable for cautious investors; strong industry demand supports growth, but valuations and modest returns warrant patience.

Positive

• Quarterly PAT growth (+66.8%) shows strong operational improvement.
• Dividend yield of 1.03% provides shareholder returns.
• DII holdings increased (+0.39%), showing domestic institutional support.
• Strong brand presence in tyre manufacturing with global reach.

Limitation

• High P/E ratio (41.5) compared to industry average (31.0).
• ROCE (9.80%) and ROE (6.28%) are modest, reflecting weak efficiency.
• Debt-to-equity at 0.31 indicates moderate leverage risk.
• Technical weakness: RSI at 38.4 and MACD (-2.53) reflect bearish sentiment.

Company Negative News

• FII holdings decreased (-0.37%), showing reduced foreign investor confidence.
• Technical indicators (MACD negative, RSI weak) show short-term pressure.

Company Positive News

• Quarterly PAT growth highlights improving performance.
• DII holdings increased, showing domestic institutional support.
• Dividend yield ensures consistent shareholder returns.

Industry

• Automotive and tyre sector supported by rising vehicle demand and replacement cycles.
• Industry PE at 31.0 indicates moderate valuation compared to Apollo’s premium.
• Sector growth expected with increasing mobility, exports, and infrastructure expansion.

Conclusion

⚖️ Apollo Tyres shows moderate fundamentals with improving profitability and strong industry presence, but valuations remain stretched and return ratios modest. Investors should consider entry near 460–480 ₹ for value-conscious positioning, with long-term holding viable for cautious investors seeking exposure to automotive growth.