Apollo Tyres is pressing ahead with a ₹3,500-crore expansion plan even as surging rubber prices and the closure of its last manufacturing plant in the Netherlands threaten to squeeze margins after the company delivered its strongest India quarter on record.

“With capacity utilisation at a high of 90 per cent across both our India and Europe operations,” Apollo expects to remain at full utilisation and “continue to progress on our planned expansion initiatives,” Chief Financial Officer Gaurav Kumar said during the company’s post-results conference call. that majority of the capex nearly 80 per cent will be used towards growth and capacity expansion projects,” with close to ₹3,000 crore to be spent in India and the balance in Europe.

Apollo reported consolidated revenue of ₹7,340 crore for the January–March quarter, up 14.2 per cent from ₹6,420 crore a year earlier, while EBITDA rose 27.6 per cent to ₹1,070 crore and margins improved to 14.6 per cent from 13.0 per cent. For FY26, revenue increased 9 per cent to ₹28,470 crore and EBITDA climbed 16 per cent to ₹4,140 crore, according to the company’s investor presentation.

Balance Sheet Muscle

The aggressive investment plan is backed by a much stronger balance sheet. Net debt fell by ₹900 crore to ₹1,600 crore in FY26, reducing net debt-to-EBITDA to 0.4 times from 0.7 times a year earlier and from 3.2 times in March 2020. Free cash flow increased to ₹2,000 crore from ₹1,300 crore, giving Apollo room to fund expansion without stretching leverage.

“Our balance sheet remains very strong,” Vice Chairman and Managing Director Neeraj Kanwar told analysts, adding that the company now has “ample financial strength to navigate future uncertainties with confidence.”

India Growth Engine

India remains Apollo’s principal growth engine. Standalone revenue rose 14.3 per cent to ₹5240 crore in the March quarter, while EBITDA margins expanded to 14.6 per cent from 11.2 per cent. The company said truck and bus replacement volumes reached their highest-ever quarterly level, supported by strong high-teen growth in both replacement and original equipment segments.

The performance came despite unusually high marketing spending linked to Apollo’s BCCI sponsorship. Kumar said advertising and sales promotion expenses were “higher by more than INR 100 crores” than normal, taking spending to 4 per cent of sales compared with the company’s typical 2 per cent.

European Reset

Alongside this expansion, Apollo is restructuring its European manufacturing footprint. The Enschede plant in the Netherlands—its last production facility in Western Europe—will close on June 30. The company has taken a non-cash write-off of €43 million on fixed assets and expects a cash payout of about €50 million under its social plan, with total cash provisions exceeding €55 million, including legal and related costs.

It’s been a tough, difficult, emotional decision,” Kumar said. The company expects the benefits of the restructuring to begin flowing through in the second half of FY27.

Apollo believes the closure will help restore European profitability. EBITDA margins in Europe stood at 14.6 per cent in Q4 FY26, still below the company’s historical norm of more than 16 per cent. “We definitely believe that in a normalised scenario, we will get back to a 16%… and in fact, we believe we can even surpass that,” Kumar said.

Rubber Shock

The timing is complicated by a sharp escalation in raw material costs. Natural rubber prices have risen from about ₹200 per kg in the March quarter to ₹250 per kg in the opening weeks of FY27. Apollo expects its overall input basket to rise by mid- to high-teens sequentially in the June quarter.

The company has already announced price increases of 6–8 per cent in India and 2 per cent in Europe, but management said additional hikes will be required. “We’ve taken about half the price increase that is needed. So at least a couple of more rounds of price increases would be needed to negate all the cost push,” Kumar said.

Despite the price hikes, demand has remained resilient. April volumes were “equally strong,” Kumar said, indicating that customers have so far absorbed higher prices without materially affecting volumes.

Geopolitical Overhang

Apollo’s management also flagged geopolitical tensions in West Asia as a source of volatility in crude, freight and commodity markets. “The geopolitical developments in West Asia have added significant volatility to raw material, energy and logistics costs,” Kanwar said.

Published on May 19, 2026