Apollo Tyres Q3 Profit Soars 40%, Declares Dividend & ₹5,810 Cr Expansion

Introduction

Apollo Tyres Ltd. has announced a strong performance for the third quarter of fiscal year 2026, coupled with significant strategic decisions aimed at future growth and shareholder returns. The company's Board of Directors approved an interim dividend, reported a substantial increase in profitability, and greenlit a major capacity expansion at its manufacturing facility in Andhra Pradesh. These announcements reflect management's confidence in sustained market demand and the company's robust financial health.

Stellar Q3 Financial Performance

For the quarter ending December 31, 2025, Apollo Tyres posted impressive consolidated financial results. Revenue from operations grew by 11.76% year-on-year (YoY) to reach ₹7,743.08 crore. The company demonstrated remarkable efficiency, with consolidated net profit surging by 39.6% YoY to ₹470.52 crore, compared to ₹337 crore in the corresponding period of the previous year. This growth in profitability was supported by an expansion in operating margins, which improved from 13.7% to 15.3% YoY. The basic Earnings Per Share (EPS) for the period stood at ₹7.43.

Segmental Revenue Contribution

The company's revenue streams remain geographically diversified. The Asia Pacific, Middle East & Africa (APMEA) region was the largest contributor, generating revenues of ₹5,208.34 crore during the quarter. The European operations also delivered a solid performance, contributing ₹2,636.89 crore to the consolidated top line. This balanced geographical presence helps mitigate regional market risks and capitalizes on growth opportunities across different markets.

Strategic Capacity Expansion in Andhra Pradesh

In a significant move to bolster its production capabilities, the board has approved a substantial investment of ₹5,810 crore for capacity expansion at its plant in Andhra Pradesh. The project will focus on increasing the output of Passenger Car Radial (PCR) and Truck Bus Radial (TBR) tyres. The expansion is planned to be completed by the end of the financial year 2029 and will be financed through a combination of internal accruals and debt. This investment is a direct response to the anticipated growth in demand for both PCR and TBR tyres in the short to medium term.

Details of the Expansion

The expansion aims to add approximately 3.7 million PCR tyres and 1.3 million TBR tyres to the plant's annual production capacity. This is a considerable addition to the existing capacity, which stands at 7.1 million PCR tyres (at 82% utilization) and 1.6 million TBR tyres (at 89% utilization). The project underscores Apollo Tyres' strategy to strengthen its market leadership and meet future demand effectively.

Commitment to Shareholder Returns

Reinforcing its commitment to sharing profits with its investors, the Board of Directors declared an interim dividend of ₹3.50 per equity share for the financial year 2026. The face value of each share is Re. 1. The record date for determining the eligibility of shareholders for this dividend has been set as February 10, 2026. The company has stated that the dividend payment will be completed within 30 days of its declaration.

Improved Financial Health

A deeper look at the company's financials reveals a significant improvement in its balance sheet strength. The consolidated Debt-to-Equity ratio has been reduced to 0.14x as of December 31, 2025, a marked improvement from 0.25x a year earlier. This indicates a healthier capital structure with lower reliance on debt. Furthermore, the company's ability to service its interest obligations has strengthened, with the Interest Service Coverage Ratio (ISCR) rising to 10.25x on a consolidated basis.

Market Outlook and Analysis

The decision to undertake a large-scale capital expenditure of ₹5,810 crore, despite the global economic uncertainties, signals strong confidence from the management in the long-term growth trajectory of the tyre industry. The expansion is strategically timed to capitalize on the growing vehicle parc and increasing radialization in the commercial vehicle segment. While the investment will involve taking on new debt, the company's improved leverage ratios provide a comfortable cushion. Investors will be closely watching the execution of this project and the company's ability to maintain its profitability margins amidst fluctuating raw material costs.

Conclusion

Apollo Tyres' third-quarter performance for FY26 highlights a period of robust operational success and strategic foresight. The combination of strong profit growth, a generous dividend payout, and a bold expansion plan paints a positive picture for the company's future. The focus now shifts to the efficient execution of the Andhra Pradesh plant expansion and navigating the dynamic market conditions to sustain this growth momentum.