APOLLOTYRE - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.5

🧾 Fundamental Analysis Summary

Apollo Tyres (APOLLOTYRE) is a well-known player in the automotive sector with a decent valuation and manageable debt. However, its capital efficiency metrics (ROE and ROCE) are relatively weak, and recent earnings have declined sharply. While the PEG ratio suggests fair valuation relative to growth, the stock lacks strong long-term compounding potential unless profitability improves.

Metric Value Interpretation

P/E Ratio 23.4 Reasonable — below industry average, offers value

PEG Ratio 0.94 Fairly valued — price aligns with growth

ROE / ROCE 8.61% / 11.4% Weak — below ideal levels for long-term wealth creation

Dividend Yield 1.10% Decent — adds some income potential

Debt-to-Equity 0.30 Moderate — manageable leverage

EPS ₹17.7 Modest — supports valuation but not aggressive

PAT Growth (QoQ) -22.3% Weak — earnings volatility

Book Value ₹232 Price-to-book ~2× — fair for manufacturing sector

RSI / MACD 48.8 / -1.29 Neutral — no strong momentum signal

DMA 50 / 200 ₹458 / ₹463 Price near averages — consolidation phase

52W Price Range ₹368 – ₹585 Currently at 40.5% of 52W high — potential upside if fundamentals improve

FII/DII Change -1.16% / +1.03% Mixed — slight DII accumulation, FII trimming

📉 Ideal Entry Price Zone

Entry Zone: ₹420 – ₹440

Below DMA levels and RSI neutral — better risk-reward.

Avoid entry above ₹470 unless ROE improves and earnings stabilize.

🧭 Exit Strategy & Holding Period

Holding Period

2–3 years — moderate-term holding recommended unless ROE/ROCE improve.

Exit Strategy

Exit partially if ROE remains below 10% and PEG rises above 1.2.

Consider trimming if price nears ₹550–₹580 without matching earnings growth.

Key Metrics to Monitor

ROCE trending above 15%

PEG ratio staying near or below 1.0

PAT growth resumes > 15% YoY

EPS trending above ₹20

🧠 Final Thoughts

Apollo Tyres offers a stable business with fair valuation and decent dividend yield, but lacks strong capital efficiency and earnings momentum. It may suit tactical investors looking for a rebound or cyclical play, but long-term investors should wait for improvement in ROE/ROCE and broader auto sector tailwinds. Not a high-conviction compounder at current levels.

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