Apollo Tyres Ltd. is Rated Hold

Rating Overview and Context

On 12 January 2026, MarketsMOJO revised Apollo Tyres Ltd.’s rating from 'Buy' to 'Hold', reflecting a recalibration of the stock’s overall investment appeal. This adjustment was accompanied by a decrease in the Mojo Score from 72 to 65, signalling a more cautious stance. It is important to note that while the rating change occurred in mid-January, the detailed analysis below is based on the most recent data available as of 04 February 2026, ensuring investors receive an up-to-date perspective on the company’s performance and prospects.

Current Market Performance and Returns

As of 04 February 2026, Apollo Tyres Ltd. has demonstrated a mixed but generally positive market performance. The stock recorded a one-day gain of 1.69%, with weekly and monthly returns of 2.55% and 3.20% respectively. Over the past six months, the stock has appreciated by 16.27%, and year-to-date returns stand at 2.78%. Notably, the stock has delivered a robust 22.12% return over the last year, significantly outperforming the broader BSE500 index, which returned 7.58% during the same period. This market-beating performance highlights investor confidence despite some underlying challenges in profitability.

Quality Assessment

The quality grade assigned to Apollo Tyres Ltd. is 'good', reflecting the company’s solid operational and financial foundation. The firm maintains a strong ability to service its debt, with a Debt to EBITDA ratio of 1.40 times, indicating manageable leverage and prudent financial management. Additionally, the company has exhibited healthy long-term growth, with net sales increasing at an annualised rate of 12.01% and operating profit expanding by 25.12%. These metrics underscore the company’s capacity to generate sustainable revenue and earnings growth, which is a key consideration for investors seeking stability.

Valuation Considerations

Currently, Apollo Tyres Ltd. is rated as having an 'attractive' valuation. The stock trades at an Enterprise Value to Capital Employed ratio of 1.9, which is below the average historical valuations of its peers, suggesting it is reasonably priced relative to the capital it employs. The company’s Return on Capital Employed (ROCE) stands at 11.3%, which, while modest, supports the valuation attractiveness. This valuation profile indicates that the stock may offer value opportunities for investors, particularly those looking for exposure to the tyres and rubber products sector at a discount to historical norms.

Financial Trend Analysis

The financial trend for Apollo Tyres Ltd. is currently assessed as 'flat'. The latest nine-month results ending September 2025 show a decline in profit after tax (PAT) by 22.27%, with PAT at ₹784.61 crores. Additionally, the company’s ROCE for the half-year period is at a low of 11.19%, and the debtors turnover ratio has decreased to 8.15 times, signalling some operational challenges. Despite these headwinds, the company’s long-term growth trajectory remains intact, supported by steady sales growth and operating profit expansion. Investors should weigh these mixed signals carefully when considering the stock’s near-term outlook.

Technical Outlook

From a technical perspective, Apollo Tyres Ltd. is rated as 'mildly bullish'. The stock’s recent price movements, including a 3.20% gain over the past month and a 16.27% rise over six months, reflect positive momentum. However, a slight dip of 1.67% over three months suggests some volatility. The technical grade indicates that while the stock shows signs of upward momentum, investors should remain cautious and monitor price action closely for confirmation of sustained trends.

Institutional Interest and Market Position

Institutional investors hold a significant stake in Apollo Tyres Ltd., with 41.73% ownership. This high level of institutional holding is often viewed positively, as these investors typically possess greater analytical resources and expertise to evaluate company fundamentals. Their continued interest may provide some support to the stock price and reflects confidence in the company’s medium to long-term prospects.

Implications for Investors

The 'Hold' rating for Apollo Tyres Ltd. suggests that investors should maintain their current positions rather than initiate new purchases or sell existing holdings. This recommendation reflects a balanced view of the company’s strengths and challenges. The stock’s attractive valuation and solid quality metrics are tempered by flat financial trends and some recent profit declines. For investors, this means that while the stock offers reasonable value and growth potential, caution is warranted given the mixed signals from recent financial results and technical indicators.

Sector and Market Context

Apollo Tyres Ltd. operates within the Tyres & Rubber Products sector, a competitive industry influenced by raw material costs, demand cycles, and technological innovation. The company’s ability to sustain growth amid these dynamics is crucial. Its current market capitalisation categorises it as a small-cap stock, which typically entails higher volatility but also potential for significant appreciation. The stock’s recent outperformance relative to the broader market index highlights its resilience, but investors should remain vigilant to sector-specific risks and broader economic conditions.

Summary

In summary, Apollo Tyres Ltd. is rated 'Hold' by MarketsMOJO as of 12 January 2026, with the latest analysis reflecting data up to 04 February 2026. The company exhibits good quality fundamentals, an attractive valuation, a flat financial trend, and mildly bullish technicals. Its strong institutional backing and market-beating returns over the past year provide positive signals, though recent profit declines and operational challenges warrant a cautious approach. Investors should consider these factors carefully when making portfolio decisions involving Apollo Tyres Ltd.

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