Apollo Tyres has reported strong revenue growth in Q2 FY27, but its earnings reveal a surprising contrast. Sales increased nearly 17%, yet profit grew only 13%, while operating margins fell sharply. The company is selling more tyres, but keeping those sales profitable has become more difficult.

Consolidated revenue from operations reached ₹7,968.15 crore, compared with ₹6,831.09 crore in the same quarter last year. This represents growth of approximately 16.6%, supported by healthy demand across important markets.

Net profit increased 13.3% to ₹292.29 crore from ₹258.05 crore last year. Although the improvement was positive, profit growth remained slower than revenue growth, suggesting pressure on the company’s overall profitability.

The quarterly comparison tells a different story. Revenue increased 7.7% from ₹7,397.79 crore in Q1 FY27, but net profit declined 16.2% from ₹348.87 crore. Apollo therefore generated higher sales without delivering higher quarterly earnings.

The biggest concern was the increase in expenses. Total expenditure rose approximately 20.5% to ₹7,587.66 crore, compared with ₹6,294.79 crore last year. Costs grew substantially faster than revenue.

Raw material expenses played an important role in this pressure. The cost of materials consumed reached approximately ₹4,241.42 crore, reflecting the significant expense involved in manufacturing tyres.

Tyre production depends on materials such as natural rubber, synthetic rubber and other petroleum related inputs. Changes in these costs can affect profitability, especially when manufacturers cannot immediately pass increases to customers.

Operating margins reflected this challenge. The reported operating margin declined to approximately 10.73%, compared with 14.94% last year and 11.73% in the previous quarter.

This means Apollo generated around ₹10.73 in operating earnings for every ₹100 of revenue, compared with nearly ₹14.94 a year earlier. The difference demonstrates how rising costs can reduce the benefit of stronger sales.

The India business provided an important source of growth. Apollo benefited from expanding its presence in rural markets, where improved distribution helped the company reach more customers.

Management also highlighted the contribution of new products in the commercial vehicle segment. This category includes tyres used by trucks and other commercial vehicles, making it important for both replacement demand and vehicle manufacturing.

The company’s association with cricket also supported its brand visibility in India. However, marketing activity involves expenditure, and its long term value depends on whether stronger brand recognition translates into sustained sales.

The Asia Pacific, Middle East and Africa segment reported revenue of approximately ₹5,973.23 crore, compared with ₹4,822.78 crore last year. This indicates that the broader regional business remained an important growth driver.

Europe presented a different picture. Segment revenue declined slightly to approximately ₹2,155.57 crore from ₹2,190.56 crore, showing that the region did not participate in the same growth momentum.

Apollo is also restructuring its European manufacturing operations. The company previously stopped tyre production at its Enschede facility in the Netherlands as part of efforts to improve its operating structure.

During Q2 FY27, the company recognised an exceptional pretax charge of approximately ₹25.85 crore. This included additional employee restructuring costs of ₹26.18 crore associated with its European operations.

These charges reduced reported profitability during the quarter. Because restructuring expenses are not necessarily repeated at the same level every quarter, investors should distinguish their impact from ongoing manufacturing costs.

However, excluding exceptional expenses does not eliminate the underlying margin challenge. Higher raw material costs and supply chain pressures continue to influence the economics of tyre production.

Management also identified geopolitical tensions in West Asia as an important concern. These disruptions have contributed to elevated input costs and difficulties across supply chains, affecting the operating environment.

For the first half of FY27, consolidated revenue reached approximately ₹15,365.94 crore, compared with ₹13,391.85 crore last year. Net profit increased to ₹641.16 crore from ₹270.93 crore, showing a substantial improvement across the six month period.

The board also approved a proposal to raise up to ₹1,000 crore through nonconvertible debentures, subject to the necessary approvals. Separately, Ravi Kumar Shingari was appointed Chief Financial Officer effective November 4, 2026.

Apollo Tyres enters the second half of FY27 with encouraging demand in India but significant profitability challenges. Its next results will reveal whether raw material pressures ease, European restructuring begins delivering benefits and stronger sales can once again translate into healthier operating margins.