Our target price for Apollo Tyres is Rs500 based on 18xFY26E (Mar'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 leader in truck and bus tyres in India, and we expect demand momentum to recover in FY26 as industrial and infra activities pick up after a lull in FY25. Margin trends in Europe have been healthy over recent quarters. There has been a marked 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 volatility of the macro/industrial cycle, and is more price-sensitive than other segments; 2) elevated raw material and energy cost pressures; 3) escalating competitive intensity; and 4) high level of promoters’ share encumbrance.