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Informist, Friday, Aug. 6, 2026

 

By Sunil Raghu

 

AHMEDABAD – Apollo Tyres Ltd. proposes to implement at least two price hikes in the September quarter to offset the impact of elevated raw material costs that continue to pressure earnings, Chief Financial Officer Gaurav Kumar told analysts in a post-earnings conference call on Friday.  

 

The tyre maker has already implemented cumulative price hikes of 7-9% in a staggered manner during the June quarter and announced a 2% hike in India for July. Kumar said the company may implement a similar increase in August. "Overall, what we need is about a 15-16% price increase, whereas we are currently at the 11-plus zone," Kumar said.

 

Raw material costs for the India business rose around 17% on year in the June quarter and are expected to increase another 8% sequentially in Jul-Sep, driven largely by natural rubber prices and continued pressure due to high crude oil prices and higher logistics costs in the wake of the war in West Asia. Kumar said domestic natural rubber prices are likely to cool from the third quarter, as seasonal factors ease.

 

Referring to its European operations, Kumar said the immediate impact of raw material inflation was more muted because the initial surge was led by natural rubber. He said the company needed to raise prices by nearly 10% over the first two quarters but has implemented only 3-4% so far.

 

Despite cost pressures, Apollo Tyres' June quarter net profit jumped 27 times on year, largely due to a one-time gain and a low base. The tyre manufacturer reported a consolidated net profit of INR 3.49 billion for the quarter, compared with INR 129 million a year ago. Analysts had estimated the bottom line to be INR 2.4 billion. The company's revenue from operations rose 13% on year to INR 73.98 billion, primarily led by volumes. The company's volumes grew 13% in the replacement segment, 10% in the original equipment manufacturers segment, and 15% in exports. The company's earnings before interest, taxation, depreciation and amortisation margin, however, fell 150 basis points to 11.7% owing to raw material cost pressures.

 

Apart from price hikes and cost-cutting, the company expects to benefit from the ongoing relocation and restructuring of its European manufacturing footprint. In June, it stopped production at its plant in the Netherlands, shifting production primarily to Hungary and partly to India. The transition, which began in September 2025, is expected to be completed by September-October. Kumar said the financial and operational benefits of the exercise are expected to accrue from the second half of the current financial year.

 

While the relocation will temporarily affect revenue and margins because of overlapping costs and production disruptions, Kumar said the European business is targeting high-teens EBITDA margins over the longer term once the manufacturing footprint is fully optimised. Apollo Tyres is also expanding passenger car tyre capacity in Hungary by 4,000 tyres per day while shifting some lower-end production and truck radial manufacturing to India.

 

Kumar said he was leaving the company after more than 22 years and would spend the next few months deciding on his future plans.

 

Friday, the company's shares ended at INR 445 on the National Stock Exchange, down 1.1% from the previous close.  End

 

Edited by Saji George Titus

 

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