Best Tyre Sector Stocks – Apollo Tyres Vs CEAT

Company Overview of CEAT Ltd

CEAT Limited, an Indian tyre company, specializes in the manufacturing of automotive tyres, tubes and flaps. They produce tyres for a wide range of vehicles, including two/three-wheelers, passenger cars, utility vehicles, commercial vehicles and off-highway vehicles. The company’s tyre lineup includes categories for cars, bikes and scooters. CEAT provides tyres for popular car models such as Maruti Alto, Maruti Swift and Maruti Wagon R, as well as for various bikes like Hero Splendor, Honda Shine and Yamaha FZ. 

For scooters, they offer tyres for models like Honda Activa and TVS Jupiter. Customers can conveniently purchase tyres through CEAT.com, the company’s e-commerce platform, where they can choose from options such as doorstep delivery, home fitment, or pickup from an authorized store. Additionally, CEAT Limited also offers cricket bats for sale.

Company Overview of Apollo Tyres Ltd

Apollo Tyres Limited is involved in the production and distribution of automotive tyres across various segments such as automobile tubes and automobile flaps. The company operates in geographical segments including Asia Pacific, Middle East and Africa (APMEA), Europe and others. It serves distinct consumer groups through its brands Apollo and Vredestein. The Apollo brand offers a wide range of tyres for commercial, passenger vehicles, two-wheelers, farm and industrial use. 

The Vredestein brand provides products like car tyres, tyres for agricultural and industrial machinery and bicycle tyres. The company’s product portfolio covers passenger cars, SUVs, MUVs, light trucks, truck-bus, two-wheelers, agriculture, industrial, speciality, bicycle and off-the-road tyres, as well as retreading materials. Apollo Tyres Limited operates in India with five tyre manufacturing plants located in Cochin, Vadodara, Chennai and Andhra Pradesh.

The Stock performance of CEAT

The table below displays the month-by-month stock performance of CEAT Ltd for the past year.

The Stock performance of Apollo Tyres

The table below displays the month-by-month stock performance of Apollo Tyres Ltd for the past year.

Fundamental Analysis of CEAT

CEAT Ltd, a prominent player in the tyre manufacturing industry, was established in 1952 in India. Over the years, the company has developed a robust reputation for producing a wide range of tyres suited for various vehicles, including cars, trucks and two-wheelers. CEAT’s commitment to quality and innovation has allowed it to maintain a significant presence in both domestic and international markets.  

The stock, priced at ₹3,185.25, has a market capitalization of ₹12,884.37 crore and a book value of ₹4,052.35. With a strong 1-year return of 30.15% and a 5-year CAGR of 25.53%, it offers a dividend yield of 0.94%, showcasing steady profitability with a 5-year average net profit margin of 3.36%. 

• Close Price ( ₹ ): 3185.25
• Market Cap ( Cr ): 12884.37
• Dividend Yield %: 0.94
• Book Value (₹): 4052.35
• 1Y Return %: 30.15
• 6M Return %: 18.39
• 1M Return %: 1.85
• 5Y CAGR %: 25.53
• % Away From 52W High: 12.36
• 5Y Avg Net Profit Margin %: 3.36 

Fundamental Analysis of Apollo Tyres

Apollo Tyres Ltd is a leading Indian tyre manufacturer with a global presence, catering to passenger, commercial and off-highway vehicle segments. Established in 1972, it operates in over 100 countries, emphasizing innovation, sustainability and advanced manufacturing to deliver high-quality, durable tyres for diverse automotive needs worldwide.

The stock, priced at ₹511.95, has a market capitalization of ₹32,513.94 crore and a book value of ₹13,902.19. It offers a dividend yield of 1.17%, with a 1-year return of 11.84% and a strong 5-year CAGR of 25.39%. The 5-year average net profit margin stands at 3.79%, indicating steady profitability.

• Close Price ( ₹ ): 511.95
• Market Cap ( Cr ): 32513.94
• Dividend Yield %: 1.17
• Book Value (₹): 13902.19
• 1Y Return %: 11.84
• 6M Return %: -4.27
• 1M Return %: 2.16
• 5Y CAGR %: 25.39
• % Away From 52W High: 14.25
• 5Y Avg Net Profit Margin %: 3.79 

Financial Comparison of CEAT and Apollo Tyres

The table below shows a financial comparison of CEAT Ltd and Apollo Tyres Ltd.

Points to be noted:

• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: Represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): Shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders.

Dividend of CEAT and Apollo Tyres

The table below shows a dividend paid by the company.

Advantages and Disadvantages of Investing CEAT

CEAT Ltd

The primary advantage of CEAT Ltd is its strong presence in the Indian tyre market, offering a diverse range of high-quality tyres for two-wheelers, passenger vehicles and commercial vehicles, supported by a robust distribution network and brand recognition.

1. Diverse Product Portfolio: CEAT manufactures tyres for two-wheelers, cars, trucks and off-road vehicles. This broad product range ensures a consistent revenue stream from various market segments and meets diverse customer needs.
2. Strong Domestic Presence: CEAT has a well-established presence in India with an extensive distribution network. This provides easy accessibility to customers and strengthens its position as a trusted brand in the tyre industry.
3. Focus on Innovation: CEAT invests significantly in R&D to develop advanced, durable and eco-friendly tyres. This commitment to innovation enhances product performance and aligns with evolving customer preferences and environmental standards.
4. Export Opportunities: The company exports tyres to over 100 countries, diversifying its revenue base and reducing dependence on the domestic market. This global footprint strengthens its resilience against regional market fluctuations.
5. Sustainability Initiatives: CEAT emphasizes sustainable manufacturing practices, including eco-friendly materials and energy-efficient production processes. These initiatives align with global trends and improve its appeal to environmentally conscious customers and investors.

 The main disadvantage of CEAT Ltd lies in its high dependency on the Indian market, which makes it vulnerable to domestic economic fluctuations and its relatively smaller global presence compared to competitors in the international tyre market.

1. High Domestic Dependency: CEAT relies heavily on the Indian market for a significant portion of its revenue. This overdependence exposes the company to risks associated with local economic downturns and policy changes.
2. Intense Competition: The company faces stiff competition from domestic players like MRF and Apollo Tyres, as well as global giants, which challenges its market share and pricing power.
3. Raw Material Price Volatility: CEAT’s profitability is sensitive to fluctuations in raw material costs, such as rubber and crude oil derivatives. This volatility can impact margins and operational efficiency.
4. Relatively Lower Global Reach: Compared to larger competitors, CEAT has a smaller international footprint. This limits its ability to capitalize on opportunities in global markets and diversify revenue sources.
5. Capital-Intensive Operations: The tyre industry requires continuous investment in manufacturing, R&D and distribution networks. High capital requirements can strain resources, particularly during periods of slow revenue growth or increased competition.

Advantages and Disadvantages of Investing in Apollo Tyres

Apollo Tyres Ltd

The primary advantage of Apollo Tyres Ltd lies in its global presence and diversified product portfolio, offering a wide range of high-performance tyres for passenger, commercial and off-highway vehicles, supported by strong innovation and branding.

1. Global Presence: Apollo Tyres has a robust international footprint, operating in over 100 countries. This global reach diversifies its revenue streams and positions the company as a significant player in the global tyre market.
2. Diverse Product Range: The company produces tyres for passenger cars, two-wheelers, commercial vehicles and off-highway applications. This diverse portfolio caters to various customer needs, ensuring steady demand across segments.
3. Focus on R&D: Apollo invests heavily in research and development to create advanced, durable and fuel-efficient tyres. This innovation keeps the company competitive and aligned with the latest industry trends.
4. Strong Brand Recognition: Apollo’s well-established brand is trusted by consumers worldwide. Its reputation for quality and performance drives customer loyalty and supports long-term growth.
5. Strategic Partnerships: The company collaborates with automotive manufacturers, ensuring its products are integral to major vehicle brands. These partnerships enhance its market position and open opportunities for future growth.

The main disadvantage of Apollo Tyres Ltd is its reliance on raw materials like rubber and crude oil derivatives, making it susceptible to price volatility, which can significantly impact production costs and profitability.

1. Raw Material Dependency: Apollo’s operations heavily depend on raw materials such as natural rubber and synthetic derivatives. Price fluctuations in these inputs directly affect the company’s margins and cost efficiency.
2. High Competition: The company faces stiff competition from domestic players like MRF and international giants such as Michelin and Bridgestone. This competitive pressure challenges its ability to sustain market share and pricing power.
3. Debt Levels: Apollo’s expansion strategies, including establishing global manufacturing facilities, have increased its debt. High leverage can strain financial flexibility during economic downturns or periods of slow revenue growth.
4. Export Market Risks: While Apollo has a strong international presence, its export revenues are vulnerable to geopolitical issues, trade regulations and currency fluctuations, which can disrupt its global operations and earnings.
5. Capital-Intensive Industry: Continuous investment in R&D, manufacturing infrastructure and technology upgrades are necessary for the tyre industry. This high capital requirement poses challenges, particularly when market conditions are unfavourable.

How to Invest in Apollo Tyres and CEAT Stocks?

Investing in Apollo Tyres and CEAT stocks requires a strategic approach, including understanding market dynamics, analyzing company fundamentals and leveraging a reliable broker like Alice Blue to ensure efficient and seamless transactions.

1. Open a Demat Account: Start by opening a Demat account with Alice Blue, a trusted broker offering advanced trading platforms, real-time data and low brokerage fees, making it easier to invest in Apollo Tyres and CEAT stocks.
2. Research Financials: Analyze the financial health, growth prospects and performance metrics of both companies. Consider factors like revenue, profitability and debt levels to make informed investment decisions.
3. Monitor Stock Performance: Track the historical and current performance of Apollo Tyres and CEAT stocks. Regular monitoring ensures you identify the right entry and exit points for optimal returns.
4. Diversify Investments: Avoid over-investing in a single stock. Diversify your portfolio across industries and sectors to minimize risks and achieve balanced growth in the long term.
5. Leverage Broker Tools: Use Alice Blue’s tools for detailed research, analytics and expert insights. These resources help you stay updated on market trends and make smarter investment choices for Apollo Tyres and CEAT stocks.

CEAT vs. Apollo Tyres – Conclusion

CEAT Ltd is a trusted tyre manufacturer with a strong domestic presence and a diverse product portfolio catering to multiple vehicle segments. Its focus on innovation, sustainability and export opportunities positions it as a competitive player in the Indian and global tyre markets.

Apollo Tyres Ltd stands out with its significant global presence, offering high-performance tyres for passenger, commercial and off-highway vehicles. Its investments in R&D, strategic partnerships and branding ensure steady growth, making it an attractive choice for investors seeking international exposure and robust market leadership.

Best Tyre Sector Stocks – CEAT vs. Apollo Tyres – FAQ

What is CEAT Ltd?

CEAT Ltd is a leading Indian tire manufacturing company, known for producing a wide range of tires for automobiles, including cars, bikes, trucks and buses. Established in 1952, it is recognized for its innovation and quality, serving both domestic and international markets.

What is Apollo Tyres Ltd?

Apollo Tyres Ltd is an Indian multinational tire manufacturing company, established in 1972. It specializes in producing tyres for various vehicles, including cars, trucks and two-wheelers. With a strong global presence, the company emphasizes innovation, quality and sustainability in its products and operations.

What are Tyre Stocks?

Tyre stocks represent companies involved in the manufacturing, distribution and sale of tires for various vehicles, including passenger cars, two-wheelers, trucks and off-highway vehicles. These stocks reflect the performance of the automotive and transportation sectors, offering growth opportunities in domestic and global markets.

Who is the CEO of CEAT Ltd?

As of 2023, Arnab Banerjee is the Managing Director and CEO of CEAT Ltd. With extensive experience in leadership roles, Banerjee succeeded Anant Goenka and is focused on driving innovation and growth in CEAT’s operations across domestic and international markets.

What Are The Main Competitors For CEAT And Apollo Tyres?

The main competitors for CEAT and Apollo Tyres include MRF Ltd, JK Tyre & Industries, Balkrishna Industries and Goodyear India. These companies compete in manufacturing tyres for passenger vehicles, commercial vehicles and two-wheelers, with varying focuses on domestic and international markets.

What Is The Net Worth Of Apollo Tyres Vs CEAT?

As of December 2024, Apollo Tyres has a market capitalization of approximately ₹34,340 crores, reflecting its substantial presence in the tyre industry.  In comparison, CEAT Ltd holds a market cap of around ₹12,854 crore, indicating its significant role in the market.  These valuations highlight Apollo Tyres’ larger market presence relative to CEAT. 

What Are The Key Growth Areas For CEAT?

CEAT’s key growth areas include expanding its product portfolio for electric vehicles, strengthening its presence in international markets and investing in research and development for high-performance and eco-friendly tyres. The company is also focusing on sustainability and enhancing manufacturing capacities to cater to rising domestic and global demand.

What Are The Key Growth Areas For Apollo Tyres?

Apollo Tyres focuses on key growth areas such as expanding its global footprint, particularly in Europe and the U.S., investing in advanced tyre technologies for electric and fuel-efficient vehicles and enhancing its production capacities. The company also emphasizes sustainability and premium product development to meet evolving market demands.

Which Company Offers Better Dividends, CEAT Or Apollo Tyres?

Apollo Tyres offers slightly better dividends compared to CEAT, with a dividend yield of approximately 1.17% versus CEAT’s 0.94%. Apollo’s consistent payouts and higher yield make it more attractive for dividend-focused investors, though both companies provide reasonable returns to shareholders.

Which Stock Is Better For Long-term Investors, CEAT Or Apollo Tyres?

For long-term investors, Apollo Tyres offers broader global exposure, consistent dividends and strong growth potential in international markets. CEAT, with its focus on innovation and domestic market leadership, appeals to investors seeking steady growth in India. The choice depends on individual goals: global diversification with Apollo or domestic growth with CEAT.

Which Sectors Contribute Most To CEAT And Apollo Tyres Ltd’s Revenue?

CEAT Ltd derives most of its revenue from the automotive sector, catering to two-wheelers, passenger vehicles and commercial vehicles in India. Apollo Tyres Ltd generates significant revenue from similar segments, with additional contributions from its robust international operations in Europe and the U.S., targeting passenger and commercial vehicle markets.

Which Stocks Are More Profitable, CEAT Or Apollo Tyres Ltd?

As of the latest financial reports, Apollo Tyres has demonstrated higher profitability compared to CEAT. In Q4 FY23, Apollo Tyres reported a net profit of ₹427 crore, a threefold increase from the previous year, while CEAT’s net profit grew by 428% year-over-year to ₹132 crore. This indicates that Apollo Tyres currently exhibits stronger profitability metrics. This indicates that Apollo Tyres currently exhibits stronger profitability metrics.

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.