Apollo Tyres Q1 FY26: Sales Up, Profit Slumps

Apollo Tyres Ltd., one of India’s largest tyre manufacturers, announced its Q1 FY26 results on 7th August 2025, showing a contrast between steady revenue growth and a dramatic drop in consolidated profits. The results reflect a complex quarter, with standalone operations improving but consolidated performance impacted heavily by one-off or external factors.

1. Consolidated Financial Performance

Apollo Tyres posted ₹6,560.76 crore in consolidated revenue for Q1 FY26, compared to ₹6,334.85 crore in the same quarter last year—a 3.57% YoY increase.

However, consolidated Profit After Tax (PAT) plummeted from ₹302.00 crore in Q1 FY25 to just ₹12.88 crore in Q1 FY26—a staggering 95.74% decline. This sharp fall suggests extraordinary expenses, provisioning, or adverse overseas performance significantly affecting net profits.

Consolidated figures summary (₹ in crores):

The fact that PBT declined only 5.69% while PAT dropped nearly 96% points to a heavy tax or exceptional item impact.

2. Standalone Performance

Standalone operations—largely reflecting domestic business—painted a much better picture.

Revenue rose from ₹4,591.59 crore in Q1 FY25 to ₹4,725.35 crore in Q1 FY26, up 2.91% YoY. Standalone PAT improved from ₹191.97 crore to ₹222.16 crore, a 15.72% YoY increase.

Standalone figures summary (₹ in crores):

This divergence highlights that international operations or subsidiaries may have caused the steep consolidated profit drop.

3. Key Highlights from Q1 FY26

• Revenue Growth: Consolidated revenue up 3.57% YoY; standalone revenue up 2.91% YoY.

• Consolidated PAT Collapse: Down 95.74%, likely due to exceptional costs or overseas market losses.

• Domestic Strength: Standalone PAT up 15.72%, showing resilience in the Indian market.

• Margin Pressure: Despite revenue growth, profitability was under stress at the group level.

4. Share Price Performance and Market Reaction

On 8th August 2025, Apollo Tyres shares opened at ₹426.50 and were trading higher at ₹432.00 later in the day, indicating investors may be focusing on the strong standalone performance and expecting the consolidated slump to be temporary.

Long-Term Performance Snapshot:

• 1-Year Returns: -15.54% (negative due to margin pressures)

• 5-Year Returns: +249.49% (solid medium-term gains)

• All-Time Returns: +6,455.39% (strong historical wealth creation)

5. Possible Reasons for the Consolidated Profit Drop

1. Exceptional Costs: Legal settlements, asset write-downs, or one-time provisions.

2. International Losses: Weakness in European or other overseas markets.

3. Higher Finance Costs: Currency fluctuations or debt servicing impacting results.

4. Tax Impact: One-off tax adjustments reducing net profit.

6. Industry Outlook and Competitive Landscape

The tyre industry is experiencing moderate growth, supported by rising vehicle sales and replacement demand. However, rising raw material prices—especially natural rubber and crude-derived inputs—are pressuring margins.

Opportunities:

• Replacement tyre market growth in India.

• Increasing radialisation in commercial vehicles.

• Export potential to emerging markets.

Challenges:

• Volatile raw material prices.

• Global competition from Asian tyre manufacturers.

• Currency fluctuations impacting export profitability.

Peers like MRF, CEAT, and JK Tyre are also navigating cost pressures, though Apollo’s broad market presence remains a strength.

7. Technical Analysis Outlook

The stock has been under correction in the past year but is showing early signs of stability.

Key Levels:

• Support: ₹420 – ₹410

• Resistance: ₹440 – ₹450

• Short-Term Trend: Sideways

• Long-Term Trend: Positive if cost pressures ease and consolidated profits recover.

8. Investor Outlook

For investors, Apollo Tyres’ Q1 FY26 results send mixed signals—standalone operations are performing well, but consolidated results are weighed down by non-domestic factors.

Positives:

• Strong domestic growth and profitability.

• Established brand with large distribution network.

• Resilient demand in replacement tyre segment.

Risks:

• Sharp drop in consolidated profits raises concerns.

• Global market exposure adds volatility.

• Raw material cost swings could impact margins.

9. Conclusion

Apollo Tyres’ Q1 FY26 performance underscores the importance of dissecting standalone and consolidated numbers. While the domestic business remains strong, the sharp consolidated PAT drop highlights challenges in overseas operations or one-off cost impacts.

Investors should watch the next quarter closely for signs of recovery in global operations and clarity on exceptional items. If the consolidated performance normalises, the current price could offer long-term value.

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