Apollo Tyres FY27 Capex Plan Targets Capacity Expansion Amid Strong Demand

Apollo Tyres has announced a capital expenditure plan of ₹3,500 crore for FY27 as the company accelerates manufacturing expansion across its India and Europe operations. The investment decision comes at a time when tyre demand remains strong and utilisation levels are running close to full capacity. According to company management, utilisation across India and European operations touched nearly 90% during Q4FY26, reinforcing the need for additional production capability to support future growth.

Gaurav Kumar, Chief Financial Officer of Apollo Tyres, stated during the company’s Q4FY26 analyst interaction that current demand conditions continue to remain healthy across segments. He noted that the company expects utilisation levels to remain elevated and therefore intends to proceed with planned expansion projects without delay. Apollo also indicated that while FY27 investments are largely committed, there may be some flexibility in FY28 depending on broader macroeconomic conditions and demand trends.

Apollo Tyres FY27 Capital Expenditure Breakdown

The majority of Apollo Tyres’ planned FY27 investment will be directed toward domestic operations. Nearly ₹3,000 crore out of the total ₹3,500 crore capex allocation is earmarked for expansion activities in India, where the company is increasing both truck tyre and passenger vehicle tyre manufacturing capacity. The remaining expenditure will be utilised in Europe, primarily focused on passenger car tyre expansion at the company’s plant in Hungary.

Kumar explained that demand levels remained so strong through April that the company faced challenges in fully meeting market requirements. This reinforced Apollo’s confidence in continuing expansion as planned. Management also highlighted that the company retains some flexibility for FY28 if macroeconomic or geopolitical developments result in slower market growth.

Higher Investments Compared With Previous Years

According to an analysis by Equirus Securities, Apollo Tyres’ FY27 capex commitment represents a major increase compared with historical spending trends. Over the last four financial years, the company maintained an average annual capex run rate of approximately ₹900 crore. In comparison, the proposed FY27 investment marks a significant scale-up in manufacturing and capacity creation activities.

Brokerage analysts noted that while the aggressive expansion strategy is necessary to support future volume growth at current utilisation levels, the sharp increase in investments could also increase financial leverage. Rising raw material costs and elevated capital expenditure are expected to put pressure on free cash flow generation and near-term profitability.

Demand Momentum Continues Across Segments

Apollo Tyres reported strong market demand during Q4FY26 across replacement, OEM and export channels. The replacement business delivered more than 20% year-on-year growth in both truck-bus radial and passenger car radial categories. In the OEM segment, truck-bus radial volumes also increased by over 20%, while passenger car radial volumes registered single-digit growth. Export performance improved in mid-single digits despite geopolitical disruptions affecting international trade conditions.

The company stated that April demand trends remained positive across categories and channels, indicating that the momentum seen during Q4FY26 has continued into the opening quarter of FY27. However, Apollo management cautioned that geopolitical tensions in West Asia are creating volatility in energy, logistics and raw material costs, which could impact operating margins in the near term.

Price Hikes Introduced To Offset Cost Inflation

To manage rising input costs, Apollo Tyres has already implemented tyre price increases ranging between 6% and 8% for the current quarter. Management confirmed that approximately 3% to 5% of the increase has already been introduced in the Indian market, while the remaining increase is expected to be implemented during May. Despite these measures, company executives indicated that the announced hikes would offset only about half of the ongoing input-cost inflation.

Management further stated that if commodity prices continue to remain elevated, additional pricing actions may become necessary. The tyre industry has been facing sustained pressure from fluctuations in crude-linked raw materials, transportation expenses and energy costs, all of which directly influence production economics.

CEAT Also Expanding Manufacturing Capacity

CEAT has also announced higher investment plans for FY27 as tyre manufacturers continue to respond to strong market demand and high utilisation rates. CEAT plans to invest around ₹1,350 crore to ₹1,400 crore in India during FY27, representing nearly 25% growth over the ₹1,076 crore capex incurred during FY26.

CEAT Managing Director and Chief Executive Officer Arnab Banerjee stated that the company would remain cautious during the first quarter due to raw material inflation and market uncertainty. However, the company still expects to proceed with planned growth and maintenance investments during the year as demand fundamentals remain supportive.

Apollo Tyres FY26 Financial Performance

Apollo Tyres ended FY26 with consolidated revenue of ₹28,470.6 crore, reflecting year-on-year growth of 9%. The company reported EBITDA of ₹4,143.2 crore, up 16% compared with the previous financial year. EBITDA margin improved to 14.6% from 13.7%, while net profit increased 22.4% year-on-year to ₹1,371.8 crore.

The company’s sales mix remained heavily weighted toward the replacement market, which contributed 79% of consolidated revenue during FY26. OEM business accounted for 21% of revenue. Regionally, India remained Apollo Tyres’ largest market with a 63% contribution, followed by Europe at 30%, while other international markets contributed 7%.

Frequently Asked Questions

Why is Apollo Tyres increasing its capex for FY27?
Apollo Tyres is increasing its FY27 capital expenditure to expand manufacturing capacity across India and Europe due to sustained strong demand and high plant utilisation levels. The company reported nearly 90% utilisation during Q4FY26 and expects demand momentum to continue into FY27. Investments will support higher truck tyre and passenger vehicle tyre production while strengthening operational capacity in key markets. Management also aims to improve its ability to meet replacement and OEM demand more effectively in the coming years.

How much will Apollo Tyres invest in India during FY27?
Apollo Tyres plans to invest nearly ₹3,000 crore in India during FY27 as part of its overall ₹3,500 crore capital expenditure programme. The investments will mainly focus on expanding truck tyre and passenger vehicle tyre production capacity to support increasing domestic demand. The company is prioritising India because it remains Apollo’s largest market, contributing 63% of consolidated revenue during FY26. Additional investments will also help strengthen manufacturing efficiency and improve future production capabilities.

What challenges could Apollo Tyres face despite strong demand?
Apollo Tyres could face challenges from rising raw material prices, energy costs and logistics expenses despite maintaining strong market demand. The company has already implemented tyre price hikes between 6% and 8%, but management stated that these increases will offset only part of the inflationary pressure. Geopolitical tensions in West Asia are also creating uncertainty around commodity prices and supply chain costs. Higher capital expenditure commitments may additionally increase leverage and impact free cash flow generation in the near term.