Financially strong stock to buy now for an upside of 37%; Do you own it?

Synopsis: A tyre stock with a market cap of ₹27,884 crore is gaining attention after a brokerage assigned a ‘Buy’ rating with a target price of ₹600, implying nearly 37% upside from ₹439. Strong industry demand, capacity expansion worth ₹58 billion, and rising replacement demand continue to support its growth outlook.

India’s tyres and rubber products sector stands at around Rs 1 trillion, powering vehicles amid booming infrastructure and auto growth. In FY26, it’s set for 7-8% revenue expansion, fueled by 50% replacement demand and 5-6% volume rise, despite raw material pressures—positioning it as a resilient market driver.

With a market capitalisation of Rs 27,884.11 crore, the shares of Apollo Tyres Ltd were trading at Rs 439.05 per share, decreasing around 1.10 percent as compared to the previous closing of Rs 443.95 apiece.

Brokerage Recommendation

Emkay has maintained a positive outlook on the tyre stock, assigning a Buy rating with a target price of  Rs 600 per share. Compared to the current market price of  Rs 439.05, this implies a potential upside of around 37 percent, reflecting the brokerage’s confidence in the company’s growth prospects and improving demand outlook in the tyre sector.

As per brokerage, the tyre industry is witnessing strong demand momentum, with double-digit growth across segments in Q4FY26. This growth is supported by economic development, higher government capex, GST cuts, and stronger brand visibility through the Indian cricket jersey sponsorship. The demand outlook for FY27 also remains healthy.

APTY has announced a capacity expansion of  Rs 58 billion for TBR and PCR tyres, expected to come onstream by FY28–FY29. In the near term, FY27 demand will be supported by the addition of 4,000 PCR tyres per day capacity in India and Hungary, along with incremental outsourcing to meet rising demand.

Despite some pressure from raw material costs, margins are expected to remain stable due to disciplined pricing across the industry. The company has already implemented modest price hikes. Export demand remains steady, while restructuring in Europe, including shifting production to Hungary and India, is expected to improve margins over the coming years.

Financials

The company reported a solid improvement in its financial performance during Q3FY26. Revenue rose by 12 percent to ₹7,743 crore from ₹6,928 crore in Q3FY25, reflecting steady business growth. Meanwhile, profitability strengthened significantly, with net profit increasing by 40 percent to ₹471 crore, indicating better operational efficiency and improved earnings during the quarter.

Over the past year, the company’s operating performance showed gradual improvement. Operating profit increased from ₹947 crore in Dec 2024 to ₹1,186 crore in Dec 2025, despite some fluctuations during the year. It declined to ₹837 crore in Mar 2025 before recovering steadily. Meanwhile, OPM improved from 14 percent in Dec 2024 to around 15 percent in Dec 2025, indicating better operational efficiency.

Apollo Tyres Ltd is one of India’s leading tyre manufacturers, producing tyres for passenger vehicles, commercial vehicles, and off-highway applications. The company operates multiple manufacturing facilities across India and Europe and sells its products in over 100 countries, supported by strong brands such as Apollo and Vredestein.

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