Strong Revenue Growth Driven by OEM and Replacement Demand

CEAT Ltd reported a 10.5% year-on-year (YoY) increase in revenue for Q1 FY26, reaching ₹3,530 crore compared to ₹3,193 crore in Q1 FY25. The performance was driven by strong demand from Original Equipment Manufacturers (OEMs) and the replacement tyre market, highlighting CEAT’s robust distribution and product penetration.

Margins Decline as Costs and Marketing Spend Rise

While revenue grew, profitability came under pressure. Net profit dropped to ₹112 crore from ₹154 crore last year, largely due to higher raw material prices and increased advertising expenditures—particularly linked to IPL branding.

EBITDA came in at ₹390 crore, slightly higher YoY, but EBITDA margin declined to 10.99% from 11.99% last year. The compression was attributed to:

• Rising input costs

• Elevated freight and logistics expenses

• Increased marketing during Q1

₹450 Crore Capex for Chennai Plant Expansion by FY27

In a significant strategic move, CEAT’s board approved a ₹450 crore investment to expand its Chennai plant capacity by 35% by FY27. This investment will focus on the premium and EV tyre segments, tapping into India’s evolving auto demand landscape.

In Q1, the company also incurred capex of ₹231 crore, fully funded via internal accruals. Net debt declined 6% sequentially to ₹1,814 crore, reflecting CEAT’s focus on financial discipline and deleveraging.

Management Outlook : Eyes on Premiumisation, EVs, and Global Revival

MD & CEO Arnab Banerjee, who was reappointed for a two-year term from April 2026, emphasized CEAT’s commitment to:

• Sustained double-digit revenue growth

• Strengthening premium and electric vehicle (EV) tyre portfolio

• Reviving international demand, particularly as global macroeconomic conditions stabilize

The CFO reiterated the company’s efforts to maintain high capacity utilization, streamline the raw material (RM) basket, and optimize working capital to navigate ongoing cost pressures.

Outlook : Long-Term Growth Intact, But Margins Need Monitoring

CEAT’s Q1 FY26 results reflect a solid revenue trajectory and forward-looking investments. However, EBITDA margin compression and global volume softness remain key concerns for near-term profitability.

That said, with strategic capex, premiumisation focus, and improved leverage, CEAT appears well-positioned for structural growth especially as EV penetration and infrastructure investments rise.

Investors will watch:

• Execution of the Chennai expansion

• Margin recovery in H2 FY26

• Pickup in global volumes and exports

Sources

Company Q1 FY26 Earnings Release

Management Commentary from Earnings Call

Regulatory Filings and Press Announcements