The company has said it will continue to raise prices to pass on the impact of higher commodity prices and is not seeing any fatigue in the market at this point. (Photo: Reuters)
The management of Apollo Tyres Ltd outlined its business strategy and outlook at its recently held annual corporate day. The tyre maker is targeting an array of financial milestones by fiscal 2026.
Under 'Vision FY2026', the company aims to achieve consolidated revenue of $5 billion, Ebitda of more than 15%, ROCE of 12-15% on a pre-tax basis, and net debt/Ebitda less than 2 times. Ebitda is short for earnings before interest, tax, depreciation and amortization. ROCE is stands for return on capital employed.
The management said it intends to achieve revenue growth by consolidating its position in the domestic market, increasing exports, expanding product portfolio for Europe and penetrating deeper into AMEA and US markets. It expects around 20% of India revenue, currently at 10%, to come from exports by FY26.
According to analysts at Nomura Financial Advisory and Securities (India) Private Limited, the company’s focus on profitable growth is a positive. Also, its limited capex requirement until FY26 and and only one more round of capex in India, seen around 75% lower than the previous greenfield plant are other catalysts for improving ROCEs, they said in a report.
"Furthermore, the company’s focus on utilising its plants in low-cost regions, such as India (target export mix of 20%, from 10% currently) and Hungary, and R&D initiatives to lower commodity costs will likely help improve margins sustainably," added the report.
Sharing a similar view analysts at Nirmal Bang Institutional Equities Ltd said that they remain positive on the company, but its revenue target, which implies at 16% CAGR, is a bit ambitious. CAGR is short for compounded annual growth rate. "We will keenly monitor its execution before incorporating the same in our estimates," said the Nirmal Bang report.
Meanwhile, the management said it will continue to increase prices to pass on the impact of higher commodity prices and is not seeing any fatigue in the market at this point.
Shares of the company were trading at flat at Rs229 on the National Stock Exchange in early deals on Tuesday.