A leading tyre manufacturing company has announced a major capital expenditure plan of Rs.1,500 crore for FY26, aiming to strengthen its production capacity and market position. The move has sparked investor interest, raising questions about whether the company can outpace its competitors in the coming years.
Price Movement
During Tuesday’s trading session, shares of Apollo Tyres Ltd reached an intra-day high of Rs.464.30 apiece, rising 1 percent from its previous closing price of Rs.459.45 apiece. However, the stock retreated later and is trading at Rs.462.05 apiece. Over the past five years, the stock has delivered over 380 percent returns.
Capacity Expansion Plans
Apollo Tyres, one of India’s leading tyre manufacturers, is significantly ramping up its investment in both capacity expansion and maintenance for FY26. The company has allocated a substantial Rs.1,500 crore for the upcoming financial year, with Rs.700 crore earmarked for maintenance purposes.
This will focus on ensuring operational efficiency and upgrading technology to support long-term sustainability. Meanwhile, Rs.800 crore will be directed towards growth initiatives, primarily funding a brownfield expansion of the company’s passenger car radial (PCR) tyre capacity.
This strategic investment reflects Apollo Tyres’ commitment to enhancing its production capabilities, addressing the growing demand in the market, and solidifying its competitive position. With these initiatives, the company aims to strengthen its market presence and further its ability to cater to evolving consumer needs.
Competitors Capex Plans
Balkrishna Industries Ltd. (BKT), the leading Indian off-highway tyre manufacturer, reported a 5 percent year-on-year volume growth in Q3 FY25 and outlined its capital expenditure plans for FY26, projecting an investment between Rs.11 billion and Rs.12 billion.
The company recently completed a 30,000 MTPA advanced carbon material plant in September 2024 and is making significant progress on its 35,000 MTPA OTR tyre range expansion, with the first phase expected to be completed by H1 FY26. For the first nine months of FY25, BKT allocated Rs.9.68 billion in capex, reinforcing its commitment to growth and expansion in the coming years.
Financial Performance
In its latest financial update, Apollo Tyres Ltd reported consolidated revenue of Rs.6,928 crores for Q3 FY25, reflecting a 5.05 percent increase from Rs.6,595 crores in Q3 FY24. However, the company’s net profit declined by 32.19 percent to Rs.337 crores, compared to Rs.497 crores in the same period last year.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 12.96 percent and a Return on Equity (ROE) of 10.13 percent. Its Price-to-Earnings (P/E) ratio stands at 21.66, lower than the industry average of 29.51. Furthermore, the company maintains a current ratio of 1.67, a debt-to-equity ratio of 0.34, and an Earnings Per Share (EPS) of Rs.21.25.
Written by – Siddesh S Raskar
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