Earnings Beat: Apollo Tyres Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that Apollo Tyres Limited (NSE:APOLLOTYRE) released its quarterly result to the market. The early response was not positive, with shares down 5.5% to ₹510 in the past week. The result was positive overall - although revenues of ₹66b were in line with what the analysts predicted, Apollo Tyres surprised by delivering a statutory profit of ₹7.82 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Apollo Tyres after the latest results.

View our latest analysis for Apollo Tyres

After the latest results, the 27 analysts covering Apollo Tyres are now predicting revenues of ₹274.5b in 2025. If met, this would reflect a meaningful 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 12% to ₹32.51. In the lead-up to this report, the analysts had been modelling revenues of ₹276.3b and earnings per share (EPS) of ₹31.20 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 7.1% to ₹507, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Apollo Tyres at ₹625 per share, while the most bearish prices it at ₹345. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Apollo Tyres' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.0% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Apollo Tyres is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Apollo Tyres' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Apollo Tyres' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Apollo Tyres. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Apollo Tyres analysts - going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Apollo Tyres' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.