Our target price for Apollo Tyres is Rs530, based on 18xSep'26E consolidated EPS. Our target multiple is set at a 15% premium to average 1-year forward P/E multiple at which the stock has traded over the past five years based on consensus estimates (source: Bloomberg). Apollo Tyres is a leader in truck and bus tyres in India, and we expect demand momentum to recover in 2HFY26 as industrial and infra activities pick up after a lull in FY25/1HFY26. There has been an improvement in cash flow and balance sheet health.

Key downside risks to our target price include: 1) a high reliance on the truck and bus tyres segment, which is more vulnerable to the volatility of the macro/industrial cycle, and is more price-sensitive than other segments; 2) elevated raw material and energy cost pressures; 3) intensifying competitive pressure; and 4) a high level of promoters’ share encumbrance.