Apollo Tyres Limited (APOLLOTYRE) Q3 FY2026 Earnings Call Transcript & Summary

Good afternoon, everyone. On behalf of ICICI Securities, we would like to welcome you all to Apollo Tyres Q3 FY '26 Earnings Conference Call. Today, we have with us from the management team, Mr. Neeraj Kanwar, Managing Director and Vice Chairman; Mr. Gaurav Kumar, Chief Financial Officer; and the Investor Relations team. We will start the call with a brief opening remarks from the management team about the quarter gone by, and then we'll proceed with the Q&A session. Thank you, and over to you, sir.

Thank you. Good afternoon, and thank you for joining us today. I welcome you all to the Apollo Tyres Q3 FY '26 Post Results Conference Call. We closed Q3 with consolidated top line growth of nearly 12% and an EBITDA margin of 15.3%. I'm pleased to share that in Q3, we have recorded our highest ever quarterly revenue, both on stand-alone and consolidated basis. On the domestic front, we saw robust double-digit growth in all channels. All our 3 product categories saw a very, very strong growth. In contrast, in Europe, the demand environment continued to be muted across key categories. We registered a flattish top line Y-o-Y in line with the subdued market scenario. As we track evolving market dynamics, our focus remains on delivering profitable growth, supported by new product introductions, premiumization of the portfolio and disciplined cost initiatives. We expect to sustain and accelerate our top line growth in India and in Europe. Let me now talk about key pillars of our Vision FY '26. Starting with R&D, we continue to secure additional model approvals from marquee PV, passenger vehicle manufacturers across India and Europe, reaffirming our strong product competencies and accelerating our premiumization journey. We have also consistently achieved podium positions in independent European tests, underscoring product excellence, strengthening partnership with premium OEMs and expanding our OE footprint. On the digitized front, we continue to invest in artificial intelligence to improve customer service, drive efficiencies in our plants and at the same time, help in cost optimization. Moving to the branding side, we continue to demonstrate strong brand equity anchored in superior product quality and customer satisfaction. Our sponsorship of the new official Indian cricket team jersey has garnered us extensive media attention and coverage, driving unparalleled brand reach and visibility and adding distribution. This landmark association is a source of pride for all the [ Apollo employees ], has boosted dealer morale and is already translating into positive business outcomes. Finally, sustainability has always been a key pillar for us. I'm happy to share that we have won multiple accolades during the quarter, including first prize by our Chennai plant in the 6 National Awards -- Water Awards in the Best industry category, recognition from SHM with the prestigious Water Management Award and at the Indian Water Leadership Conclave and many others. These achievements reflect our unwavering commitment to environment, health, safety and our sustainable growth. As part of Apollo's health care initiative, we have recently inaugurated our 35th health care center in Rajasthan, enhancing health care access for the trucking community. We have also partnered with the UN development program to advance biodiversity conservation. With this, I conclude my opening remarks. But as we closely track market dynamics and our cost structures, our focus remains firmly on sustainable and profitable growth. We are proactively preparing for emerging challenges and opportunities, and I'm confident that our strong fundamentals and strategic direction will support long-term value creation across our markets. Thank you for listening to me. I'm handing over to Gaurav. Thank you.

Thank you, Neeraj, and good afternoon, ladies and gentlemen. Continuing from where Neeraj left, let me share further details of our operations for the last quarter. The consolidated revenue for the quarter stood at INR 77.4 billion, a very strong growth of almost 12% over the same quarter last year. The consolidated EBITDA for the quarter stood at INR 11.9 billion, an improved margin of 15.3% compared to 14.9% in the last quarter and 13.7% in the same quarter last year. Coming to the balance sheet. Our consolidated net debt level stood at a level of INR 13 billion as at the end of this quarter, substantially lower than the INR 26 billion at the end of previous quarter. The sharp decrease in net driven -- net debt was driven by reduction in short-term borrowings as a result of strong operational cash flows. The net debt-to-EBITDA for the consolidated operations dropped to 0.4x at the end of December '25 compared to 0.8x at the end of September '25. We witnessed robust demand momentum in Q3, leading to the highest ever revenues on both stand-alone and consolidated basis. We registered double-digit Y-o-Y growth in our stand-alone and consolidated revenue, the highest growth over the last 12 quarters. The momentum was driven by a more positive demand environment in India, coupled with the added boost from the reduced GST rates for the industry. As Neeraj mentioned, enhanced brand visibility through our strategic sponsorship has also led to the strong performance, especially in the consumer tyres category. In India, the revenue for the quarter was INR 51.4 billion, a growth of 13-plus percent over the same quarter last year. The EBITDA for the quarter stood at INR 7.5 billion, a margin of 14.5% compared to 15.3% in the last quarter, but significantly higher than the 11.1% in the same quarter last year. The profitability was impacted, as we've discussed over various calls and meetings with you people, by the timing of the spend on the sponsorship, which started in this quarter relative to our other A&P spends and is only a near-term impact. The A&P spend would normalize from next year onwards. We witnessed that Q3 volume growth Y-o-Y was in mid-teens, led by a strong double-digit growth across all categories, replacement, OE and exports. Our premium brand, Vredestein, continued to get good traction and achieved highest ever volumes in this quarter. On the demand outlook, we anticipate healthy momentum to continue into Q4 of the fiscal year. We witnessed continued strong demand during the month of January with double-digit growth. Moving on to the raw material side. We expect the raw material cost to be steady in Q4. On the balance sheet for the India operations, the net debt level stood at INR 18 billion in India, significantly lower as compared to the September level. The net debt-to-EBITDA for India operations reduced to 0.7x from the 1.1x at the end of previous quarter. In our stand-alone results for this quarter, the exceptional item below the EBITDA includes a onetime charge of INR 259 million on account of the estimated obligation under the new labor court. This is based on actuarial valuation and best estimates in accordance with the accounting standards. Coming to Europe. The revenue for the quarter was EUR 180 million, flattish compared to the same quarter last year. The EBITDA for the quarter stood at EUR 32 million, a margin of 17.9% compared to the 17.7% for the same quarter last year and substantially higher than the 12.7% for the last quarter. Continuing with our premiumization journey, the UHP mix for the quarter increased to 52% compared to the 48% for the same quarter last year. Our PCR capacity expansion in Hungary is progressing as planned, and we expect an acceleration in demand momentum going forward as we ramp up this capacity. Over the last 4, 5 years, our strategic intent around the judicious use of CapEx in an effort to sweat our assets, prioritize deleveraging and return on capital via our pursuit of profitable growth has borne fruit. As seen in our strong balance sheet, we've had low levels of growth CapEx over this period and substantial improvement in our underlying operating metrics. We remain committed to this strategic intent while also ensuring that we are making the right investments for continued profitable growth in our core categories, particularly to capitalize on the demand environment as our capacity utilization has continued to increase through the year. Our current capacity utilization level in India are in the high 80s. And given our growth expectations for the near future, as seen by the current demand momentum, we would start hitting capacity limitations soon. And hence, it was prudent for us to plan investments in our core categories for the next 3, 4 years. Taking this into account, the Board of Directors in the recent meeting approved INR 5,800 crores CapEx for our AP plant for expanding both the PCR and TBR capacities spread over the next 3 financial years, that is FY '27, '28 and '29. As part of this, there would be a growth CapEx of about INR 2,000 crores in FY '27. Our CapEx guidance for FY '26 remains as such. We will continue to provide you a clear picture of future CapEx plans as done over our calls over the last few years. And our strategy would continue to be focused on profitability, free cash flow generation and return ratios. With this, I would conclude my opening comments. Thank you, and we would be happy to take your questions.

[Operator Instructions] We'll take the first question from Raghunandhan N. L. from Nuvama.

Congratulations, sir. My first question, sir, on the capacity increase. Roughly, if I calculate, there would be about 370 tonnes per day getting added because of the PCR and TBR addition. And the CapEx per tonne seems to be around INR 16 crores, INR 17 crores. I was trying to understand this is further higher compared to the previous CapEx, which we have done. So I was trying to understand what has led to this increase in CapEx per tonne.

Sure, Raghu. Your calculations are broadly correct. It is about a 350 tonnes capacity addition leading to about INR 17 crores per metric tonne of CapEx. The increase comes as a result of both the inflationary pressures, and you would see that our last big CapEx was back in FY 2021 and also because the technology keeps moving. The capacities that we have set up have always been state-of-the-art, not just catering to a small segment of the market. It caters to the global OEMs, both in India and also the overseas developed markets of Europe and U.S.

Got it, sir. Sir, my second question was on the India volume growth. And if you can give a breakup between OEM replacement and export and also your thoughts on how do you look at the outlook for replacement and exports for FY '27?

Our volume growth for OEM and replacement was in mid-teens. And in exports, it was just short of 20%. So we've had a healthy growth, as I mentioned, across all the 3 channels.

Got it, sir. And how do you see the outlook, sir, for FY '27?

Outlook as of now, Raghu, seems to be very good. As I mentioned, even January has seemed good. And as of now, the expectation is that this demand momentum will continue.

Understood, sir. And last question before I fall back to the queue. On A&P spends, how much was A&P in Q3 as a percentage of your stand-alone? And how do you see this ratio panning out over a year period because I think you have a tie-up with BCCI for a period of 3 years?

Sure. So Q3, Raghu, would be an anomaly given that there was activation apart from the usual sponsorship fee, so it would have jumped up. We used to be roughly around 2% spend of A&P as a percentage of sales. In a normalized scenario, we would be upping it to about 2.5% to drive the top line growth. And that is where it should settle as we go forward.

Next question is from Basudeb Banerjee.

Few questions. To continue with Raghu's question, like 2.5% would be the A&P ahead. How much was the A&P this quarter exactly?

Just 1 minute, Basu. It is clubbed with a little bit of other expenses, but A&P along with certain sales promotion was of the order of INR 150 crores.

And you are saying that elevated number will last till Q4?

Yes. In the short term, because even as we take our call on what are the A&Ps we want to continue, what are the ones we would reduce, it will take some time, Basudeb, because of existing contracts. And that's why I said the FY '27 scenario would be a more normalized scenario for our A&P spend.

Sure. Second thing, sir, as you typically give out your raw mat basket prices and from an outlook perspective, as you said, steady. So if you say like currency on one side, crude and natural rubber price -- international prices slightly inching up. So all those things, how to look at that, whether gross margin can play a spoil spot as such? Or you don't think there is any chance of that under current outlook?

See, the international volatility -- and we continue to live in times where some of these global events are very difficult to predict. Even within 1 week, 2 week, we have seen the rupee swing very sharply both ways. Middle of the quarter, we were looking at some further tailwind from the raw materials. Based on the international scenario, the current outlook given by our procurement team is a flattish scenario. So as of now, that's the best estimate we have. On your first part of the question, the prices for some of the commodities, natural rubber was around INR 195 a kg, synthetic rubber at INR 170, carbon black at INR 115 and steel cord at around INR 155 a kg.

Sure. And last question. So it's good to see a massive debt reduction. So -- but in the P&L, if I see Q-o-Q stand-alone interest outgo was, in fact, higher. So when should we see the reflection of the reduction in debt at the P&L level?

It should start coming in because of a large part of the inventory because the long-term debt repayment, Basudeb, was happening as per schedule. There was no -- the big reduction was on some of the working capital borrowings as inventory reduction happened. And that may have happened in the last 1 month or 45 days. So it will start reflecting fairly in the next quarter.

We'll take the next question from Amyn Pirani.

My question is on this capacity expansion. So first, a clarification. The capacity utilization that you mentioned in your release of 82% for PCR and 89% for TBR, is it just the Andhra capacity that you're talking about or is it just your full company capacity in India -- capacity utilization in India, right?

So the release that was there because there is a certain format, Amyn, and very valid question was for the AP. For us, what is more relevant is the overall India operations capacity utilization. That, as I mentioned, is in the high 80s, both for car tyres and truck tyres.

Okay. And so just a follow-up on that. You mentioned INR 7 million and INR 1.6 million that you have in Andhra and you mentioned how much you will add. Just want to get a sense that including Chennai and everything else, how much will the addition be? Do you have that number? Like how much PCR do you have vis-a-vis the [ 3.7 ] being added and how much TBR you have vis-a-vis the TBR being added?

Sure, Amyn. And let me talk of the capacity in terms of number of days. So our India capacity is a little short of 60,000. So let's say, about 58,000, and we are adding 10,500. So we are adding about 17%, 18% of capacity to our India PCR capacity. Similarly, our existing TBR capacity is 15,000 plus, and we are adding 3,600 tyres per day capacity, so about 20%.

Okay. That's helpful. And just on the CapEx number itself. So I'm guessing this year, we will be at like less than INR 1,500 crores for the full year on a consol basis, target [ INR 10,000 ] crores?

That's right.

And next year, you talked about a growth CapEx of INR 2,000 crores. So then would it be fair to say that overall CapEx, including maintenance and everything could inch like in excess of INR 2,500 crores because there's a PCR expansion ongoing in Hungary as well, right? So how should we put all that...

So I would put the overall CapEx number for next year closer to INR 3,000 crores, Amyn. As you rightly said, there is the PCR expansion in Hungary which was already underway. Some of it is coming in this year, some of it in next year. And then our usual maintenance operational CapEx across different functions always totals up to about INR 700-odd crores. So I would put that number at INR 3,000 crores for next year.

Okay. And I know it's a bit early in the day, but then in this '27 to '29 cycle, would '27 be the peak year or will INR 3,000 crores on an overall consol basis is the number that we should assume for this cycle?

'29 will be a much more tapering off, but '27 and '28, both years would be high CapEx. '28, in fact, might be even higher than the INR 3,000 crores, that's the midsection of that CapEx.

Okay. So just one last thing on this. What is your ROCE right now? And as we're getting closer to the end of the '26 plan period, any initial thoughts on how we should think of ROCE because on the one hand, growth is picking up, but CapEx is also picking up.

So our current year ROCE, we are running at 13.5%, Amyn. It is in the band where we had set out our targets, but still not reaching the 15% target where we want it to be. And I think we crossed that number or at that number for 2 out of the 5 years. As we are finalizing the budgets, we are also on the drawing board for our 5-year vision from April '26 to March '31. And we would definitely be looking at ROCE leveraging and the free cash flows, taking into account the operational metrics, but also the fact that CapEx is kicking in. So we'll have to come back to you on that.

We take the next question from Joseph.

I have two or three questions. One is on the income tax, the stand-alone entity has been at about 33%, 34% tax for some time. We haven't moved to the 25% tax. Now with the changes that have happened in the mat this year's budget, do you expect to go to a 25%, 26% tax soon?

Yes, Joseph, the tax team is examining and with the change, most probably we would be moving to that tax bracket.

So effective FY '27?

I think so.

Sure. The second question that I had was on CapEx. So over the last 3, 4 years, I think you also mentioned this in your opening remarks. Last 3, 4 years, the focus was on bite-size CapEx and debottlenecking, et cetera. And if I remember pre-COVID, tyre companies, including ourselves us to announced INR 3,000 crores, INR 4,000 crores, a big lumpy CapEx. But for the last 3, 4 years, we've not seen tyre companies do that. And in that sense, this is a change. So I want to understand what takes us away from the practice that we have had for the last 3, 4 years and coming in announcing a very big CapEx?

So Joseph, it's not moving away from that intent. There is -- are also times when within the same building, you can do marginal increases in capacity with few equipment ordering as we would call in manufacturing parlance as line balancing. But we reached a stage where we could not further increase the capacity by line balancing and hence, any further increase in capacity needed civil. And the moment you go reach that stage, it has to be of a certain quantum. Now also to be fully transparent about the CapEx, we could give you just an FY '27 CapEx, and say another 9 months down the line that we'll give you the FY '28 CapEx because that's when it is being incurred. But the fact is that the CapEx plan that we have needs to be of a certain quantum to be optimizing on the manufacturing capacity, the civil construction. And hence, it is better that we are transparent about the overall plan that is there in the mind as we kick off this CapEx. It's not moving away from that. This can then be followed again by the small bite-sized CapEx because within that same building, if it is possible. So it is not dictated by a change in strategic intent, but more as to where we stand vis-a-vis our capacity and capacity utilization cycle.

Gaurav, just to add to that. Joseph, we are also seeing shortages in TBR and passenger car and in farm. Given what we have been able to do with BCCI, we are seeing a lot of traction coming from the rural market, specifically in 3 categories, which is PCR, 2-wheeler and in farm category. And that's where the growth is coming. In our estimates, we will -- in TBR, we are running at close to 100% utilization. So we need expansions coming. And like I said in my opening remarks, it's all towards a profitable growth. And Gaurav has already explained you the fundamentals behind the factory.

Understood. Just the last one, just some clarifications. One is the INR 3,000 crores that you mentioned, it is at the consolidated level, right? It includes growth, maintenance and the European CapEx?

That's correct, Joseph.

And the last thing was if you can share the numbers for reifencom for the quarter, it will be good.

You mentioned reifencom?

Reifencom Revenue and margin, if you can share, which you typically do every quarter.

So reifencom revenues for the quarter were EUR 82 million with an EBITDA margin of 8%. This is the best quarter, but yet the markets were weak. So...

We take the next question from Arvind Sharma.

The first question is on the pricing environment. You alluded to a very strong demand growth. How is the pricing, especially in the replacement market?

Pricing has largely remained stable, Arvind. It's held up. We haven't taken any pricing action and people have been competitive, but the raw material tailwind have played into the margins as you would see for all the players.

Got it. And just one question more on accounting purpose. You alluded to a fairly strong CapEx for the next 3 years. Will it be a by part CapEx, i.e., some lines, as you said, some lines start coming in earlier. So the revenue starts accruing in parts over this period? Or do you believe that the entire revenue, hopefully, demand that is, comes only in FY '29?

No, Arvind, we will start seeing some revenue flow into FY '28. And the reason for taking these approvals and starting next year itself is we see that we will start hitting capacity constraints towards end in FY '27. So we will have some capacity coming on stream in FY '28, which will play into the revenue and then it will ramp up. And only towards the second half of FY '29 will all of the capacity be on stream. So actually, the full benefit of these CapExes will be there in FY '30.

Got it. But FY '28 onwards, given demand remains where it is, you would see some revenue start accruing?

Yes, sir.

Next question is from Kapil.

This is Kapil from Nomura. My question is on Europe. When will the labor restructuring that we've had in Netherlands plant start getting visible in terms of benefits? And how much benefit do you expect from that?

Sure. So Kapil, as announced, the plant remains on track. The Enschede plant in Netherlands will stop production end of June 2026, one quarter into FY '27. The transition of the various product categories to the plant in Hungary and India is already underway. And we think that in second half of FY '27, you would start seeing the benefit of that flowing through. I would hold on to giving the margin guidance as we do not do across, but we think there will be a definite boost up to the European operations profitability with that.

Sure, sir. And second question was we've recently seen the India-Europe and India-U.S. trade deals getting announced. If you could share some of your broad thoughts on how the company can take advantage of these in terms of export potential? How are you looking at competitiveness of Apollo Tyres now after these deals become effective from this year or next year?

So Europe is a very strategic and almost a home market for us, so a deal is welcome. The duty levels were anyway small. But with this announced closure of Enschede, the exports to Europe would even increase. So any kind of FTA is welcome. We would not have the details right now as to quantifying the benefits. U.S., of course, with the duty reductions would further sort of, let's say, provide a boost. Our revenues had not suffered, but profitability had definitely taken a bit of a beating in the current year. That will start going up.

And do you see a potential that we could gain market share significantly in either Europe or U.S. after this? I'm not talking of short term, but maybe in next 2, 3 years.

See, in both these geographies, we will still continue to be a small player. Will we gain market share? Yes. But in Europe, replacement market, we are all of under 3% market. Our gaining of market share also given the market size would still be in decimals. We will gain market share. We expect both these geographies to keep growing at a significant pace for us. But within an overall context, India is and will remain our largest market.

We take the next question from Yash Agarwal.

Congratulations on your results. You highlighted that the domestic demand is really strong. So can you -- just on the each segment level, can you see which segment is having a better demand like PV versus truck? And what is the channel inventory level as of now?

So right now, Yash, we are seeing a strong demand across categories. For example, even in Q3, the only area in the domestic market where we had a slow growth for us was PCR OE, which was more a result of some of our past actions of not taking up certain accounts because of profitability reasons. Otherwise, the growth across replacement and OEM for all product categories was very strong. As Neeraj mentioned, also with the Jersey sponsorship, we are seeing very good traction on the passenger car, 2-wheelers and farm, including in the rural segment. But even the truck demand has picked up very strongly, both from OEM and replacement.

Okay, sir. And second question on the channel inventory level?

Inventory levels are fairly normal. There is no abnormality in that.

And my last question is on the Europe demand scenario. What's the outlook for Q4 as a few of the other players in the industry highlighted pickup in the demand and things getting better at the back end of FY '25. So do we also see similar trends?

Right now, Europe continues to be a weak market. Even in the Q3, the quarter gone by, the passenger car Europe market, which is our most relevant category, the market growth was minus 1%. It sort of improved from a mid- to high single-digit negative to this level. But it continues to be in the low single digit. I'm in fact, sorry, the Europe market was minus 4%. So there are signs of it improving, but still not to a point that it is getting into the positive zone, Yash.

We take the next question from Mihir Vora.

Am I audible?

Yes, Mihir.

So sir, basically, if we go through the CapEx currently, you mentioned that it is around INR 17 crores per -- tonne per day. And previously, when we had done this FY '20, Andhra Pradesh CapEx at around INR 11.5 crores to INR 12 crores tonne per day. So this sort of an increase into a CapEx, so how are we seeing the pricing in a longer term in our products basically that how will the pricing move up going ahead in terms of realization because the CapEx cost has gone up.

Mihir, I won't have the data readily right now, but we can come back to you as a team. The pricing does move up. Year-to-year, it doesn't seem evident. But each time the raw material cycle kicks in, the pricing moves up, even though there is pricing pressure. And then it sort of is sticky as the raw material cycle goes down. So we can present that data to you as to how it has moved over the 5-year period.

Right. But if we -- just -- apart from that, just an idea from you that if the RM stays stable where is -- like it does not, but if it stays stable, then what kind of hikes do we need to take to maintain that return levels on a plant?

I wish we had this nice stable scenario of RM remaining constant, but we would probably need to take mid-single-digit kind of price increase every year.

Okay. All right. And sir, secondly, on the debt levels, what are we seeing in terms -- like right now, we are at a INR 1,300 crore mark in net debt. But going ahead with the larger CapEx, how do we see our debt in FY '27 going ahead?

We will take on some debt as we go through FY '27 CapEx and even FY '28. In our estimate, with a normalized industry scenario, we would still be below our long-term stated goal in this vision period of below 2.0 net debt to EBITDA, even at the peak levels.

We take the next question from Naveen Vaid.

Just to confirm the volume growth that you highlighted, which was in mid-teens, that's only for the stand-alone business?

That's on the stand-alone business. Europe was...

Yes, Europe was?

Europe was flattish.

We take the next question from Vijay Pandey.

A couple of questions. First, I wanted to check if you have any raw material hedging and currency hedging policy, especially connected to the rubber -- global rubber prices.

We've looked at raw material hedging, Vijay, and we came to the conclusion that we would rather not get into the speculation because very little of this also comes with delivery of the product. So after looking at it for quite some time, we came to the conclusion to stay away from rubber or crude oil hedging. On the currency side, all our borrowing, if it's in a foreign currency is fully hedged 100% on both principal and interest. And even on our operational exposure, we are a net importer in India. Our hedging ranges between 75% to 100%.

Okay. Sir, because currently, the global rubber prices have been increasing over the last at least 4 weeks, when -- what is the time frame after which we start seeing the impact on the P&L? Or is it like a quarter or 2 quarters?

So for our India operations, it's maximum a quarter, sometimes even lesser than that because what is sourced from the local sources pretty much starts sitting within a month. For European operations, the lag is about a quarter.

Okay. And lastly, sir, just a note. So our stand-alone other income was pretty significant this quarter. Is it anything related to something significant?

Yes. It was a onetime dividend that was received through the overseas subsidiaries. And that's why the number is significantly higher.

This is just for this year? Or does it come every third quarter?

No, no. This is only for this year.

We have a follow-up question from Naveen Vaid.

Just wanted to check in terms of the pecking order margins, especially for the domestic market, what would be the differential of margins between exports and the aftermarket business? Some color.

So replacement always remains as the most profitable category. Exports is usually much lower than that. Of course, it can depend on the currency part of it. So PBR is the way wherein exports may inch up closer to the domestic replacement. But in general, domestic replacement would be always higher margin than exports.

We have the next question from Nitin Agarwal. I think he has dropped from the line. [Operator Instructions] So we have a question from Mumuksh.

Sir, I just wanted to understand on the Europe side on the demand there. And over the next few years, I mean, what kind of capacity expansion where we need to expand considering the demand there? And any further updates on what kind of savings we can see with the Netherland plant closure, how can positively the margins get impacted?

So Mumuksh, as mentioned earlier, the Netherlands demand for last 1 year has been in the negative zone. It's improved from where it was from significant negative to slight negative across product categories, but it is still negative PCR, agri, truck, all of them. Long-term trend of the European market is generally a 1% to 2% growth. So that should remain. As of now, apart from the capacity expansion, which is underway in Hungary, in near term, there is no plans of any further capacity expansion unless something very different plays out on the market demand scenario. As of now, the current expansion we are undertaking is good for us for a few years.

And sorry, if I missed on the savings, how the closure can help on margins, sir?

On the closure side, again, as I mentioned, we will start seeing the results playing into our P&L numbers from second half of FY '27. There would definitely be a boost. At this stage, we would refrain from giving out specific margin guidance.

Got it, sir. And sir, if I -- I mean, you may have covered, just on the advertising spend on sponsorship side, how are you seeing the impact on the ground in terms of brand recall or how you're benefiting from this new initiative?

Neeraj also mentioned very strongly, we are seeing a very strong brand pool and we stand committed to this sponsorship and the fact that the positive impact it is doing, both in the rural areas on the consumer tyres, we see a very strong impact of this A&P spend.

Got it, sir. Sir, on the cost side, if you can mention how would the Q3 RM breakup there? And just recently, the natural rubber has gone up. I mean, how do you see the trend there in terms of cost side?

Mumuksh, I'm not sure if you missed out some of the earlier question answers. So you joined late or what?

Okay. I will note it down, sir. I just joined late, sir.

We have the next question from Nitin.

The market share trend that we are seeing in both the TBR and PCR and along with your OEM and replacement because last time you indicated that we are -- we have lost some market share in the PC segment primarily because of low-margin bids that we avoided. So your thoughts there?

So in terms of market share, we believe we have either maintained or gained market share in the current quarter. So some of that reversal has started. We still need to -- we gained some of the lost ground on the PCR OEM side, Nitin. As I mentioned, some of the decisions on account of profitability that were taken 1 or 2 years back. And in OEM, it always plays out longer. So we are taking strategic calls on OE business. We will not, again, completely swing ignoring the profitability aspect, but we are recovering some of the market share that has been lost.

Okay. So just can you put a number on your market share for TBR and PCR in the replacement segment, if possible?

There is no official data available. We would put our TBR replacement share close to 30% and our PCR replacement close to 20%.

Okay. So I guess there are no further questions in the queue. I'll hand it over back to the management for any closing remarks.

I want to say thank you for joining our call and hope to see you in the next quarter. All the best. Thank you.

Thank you.