APOLLOTYRE - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 19 Sept 25, 2:16 pm

Investment Rating: 3.5

🛞 Long-Term Investment Analysis: Apollo Tyres Ltd. (APOLLOTYRE)

Apollo Tyres is a prominent player in the automotive tyre industry with a strong brand and global footprint. While it shows signs of earnings recovery and maintains a healthy balance sheet, its valuation is stretched, and profitability metrics are modest, making it a moderate-risk long-term candidate.

📊 Financial & Valuation Snapshot

Metric Value Assessment

P/E Ratio 46.6 vs Industry PE 33.2 ⚠️ Overvalued

PEG Ratio 1.24 ✅ Fairly valued for growth

ROE / ROCE 6.28% / 9.80% ⚠️ Weak capital efficiency

EPS (TTM) ₹10.4 ⚠️ Low earnings base

Dividend Yield 1.03% ✅ Modest income generation

Debt-to-Equity 0.32 ✅ Healthy leverage

PAT Growth (QoQ) -1.27% ⚠️ Earnings stagnation

Book Value ₹168 P/B ~2.88x → ✅ Reasonable premium

📈 Technical & Trend Indicators

RSI: 61.7 → Approaching overbought zone

MACD: Positive → Bullish momentum

Volume: Below average → Mild caution

DMA 50/200: ₹466 / ₹463 → Price above support levels

🧾 Institutional Sentiment

FII Holding: -1.16% → Foreign exit

DII Holding: +1.03% → Domestic accumulation

🎯 Ideal Entry Price Zone

Buy Range: ₹420–₹450

Near DMA 200 and below RSI 50

Offers better margin of safety and avoids buying near resistance

🛫 Exit Strategy & Holding Period

If You Already Hold

Holding Period: 2–3 years to benefit from auto sector recovery and margin expansion

Exit Triggers

Price exceeds ₹525 without earnings support

ROE remains below 7% for 2+ quarters

PEG rises above 1.5 or P/E crosses 50

PAT growth stagnates or RSI crosses 75

If You’re a New Investor

Wait for RSI < 50 and price near ₹440

Monitor quarterly PAT and ROE trends

Look for MACD reversal and volume breakout

🧠 Summary

Apollo Tyres is a moderate-risk auto component play with sector tailwinds and improving fundamentals. While valuation is slightly rich and profitability needs improvement, it remains a reasonable long-term candidate for investors seeking exposure to the automotive cycle.

Let me know if you'd like a peer comparison with MRF or Balkrishna Industries.

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