CEAT

CEAT reported a strong Q2 FY26, with consolidated revenue growing 14.2% YoY to ₹3,773 crores. This growth was primarily volume-led, with overall volume increasing by over 11%. The company achieved a consolidated EBITDA margin of 13.5%, expanding by 259 bps QoQ and 250 bps YoY. Gross margin also saw significant improvement, reaching 40.9% due to softening raw material costs and improved realization. Consolidated profit for the quarter surged to ₹185.7 crores, up from ₹112.3 crores in Q1 FY26.

The Indian tyre market is in a favorable phase, supported by recent GST announcements which are expected to enhance demand, especially in semi-urban and rural areas. While September saw subdued activity due to GST anticipation, momentum shifted post-announcement. CEAT expects robust single-digit growth for the Indian tyre market in the immediate future. Replacement demand for MHCV tyres is projected to grow mid-single-digit, two-wheelers at 7-8%, and passenger cars at zero to low single-digit. OEM growth is optimistic, with passenger cars at 6-8% and MHCV at zero to low single-digit.

The acquisition of the CAMSO business was completed on September 1, 2025, with a total cash outflow of ₹1,232 crores. This acquisition positions CEAT as a leading player in the premium OHT segment, with the business expected to be margin-accretive in the medium term. Currently, CAMSO operates under a sales and supply agreement with Michelin, meaning CEAT's margins are not yet fully reflective of the overall business. The transition to direct customer relationships is expected over the next 3-4 quarters, while setting up upstream equipment for full value chain control will take 5-6 quarters. CAMSO's current capacity utilization is 50%, with gradual ramp-up expected.

International business demonstrated strong growth in high-teens during Q2, driven by geographical diversification and deeper market penetration. Non-specialty business saw mid-teens growth in Europe, Africa, and the Middle East, with Europe being the most profitable and fastest-growing cluster, particularly for passenger car tyres. Passenger and truck bus radials contribute 65% to CEAT's exports. In electrification, CEAT holds a 30% share in the OEM PC/UV EV segment and about 20% in the two-wheeler EV space, focusing on product development for emerging vehicle sizes.

CEAT continues its premiumization efforts, launching two innovations in Q2: 90% sustainable bio-based SecuraDrive CIRCL concept tyres and a premium mining tyre, RockRad, for the truck-bus radial segment. The company is also focusing on digital transformation, implementing GenAI and Agentic AI. Autonomous digital agents were introduced across key business areas, and an agentic chatbot was launched on the website, leading to over 1 million increase in website traffic and 20% organic traffic growth since last year.

CEAT's total CAPEX for H1 FY26 was ₹415 crores, in addition to ₹236 crores for CAMSO intangibles. The full-year CAPEX plan remains at ₹1,000 crores. Key CAPEX allocations include ₹100 crores for R&D/IT/maintenance, ₹50 crores for TBR expansion, ₹70 crores for Ambernath plant expansion, ₹160 crores for Chennai PC/MCS, and ₹40 crores for debottlenecking. Consolidated debt stood at ₹2,944 crores as of September 30, 2025, an increase of ₹1,130 crores from June-end. The debt-to-EBITDA ratio was 1.8x, and debt-equity was 0.64x, both within the company's internal targets of not exceeding 3x and 1x respectively.

Raw material costs in Q2 were approximately 5% lower than Q1, with international natural rubber prices stable at $1,700-$1,750. Crude derivatives showed mixed movements, but overall contributed to the cost reduction. For Q3, raw material costs are expected to remain flat at Q2 levels, with potential slight declines, though rupee depreciation (around 3% in Q2) could exert some upward pressure. CEAT expects to continue its double-digit growth momentum and maintain a steady margin profile going forward^⏳.