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    CEAT

    CEATLTD
    Automobile and Auto Components·20 Jan 2026
    Management Summary

    CEAT delivered a strong Q3 FY26, achieving record consolidated revenue of INR 4,157 crores, driven by robust volume growth across all segments. Standalone EBITDA margin was healthy at 14.08%, despite a slight gross margin contraction due to input cost pressures. The company announced significant new capex for capacity expansion and continues to integrate the CAMSO business, which is showing double-digit profitability post-transition costs. Outlook remains positive for demand, though raw material costs are expected to rise slightly in the near term.

    Highlights

    8

    • Consolidated Revenue reached INR 4,157 crores, marking a 26% YoY growth.

    • Standalone Revenue stood at INR 3,957 crores, growing 20.1% YoY and 6.91% QoQ.

    • Standalone EBITDA was INR 557 crores, with a margin of 14.08%.

    • Standalone Net Profit for the quarter was INR 191.6 crores.

    • The company approved a new capex of INR 1,314 crores for an additional 3.5 million tires capacity at the Chennai plant.

    • CAMSO business reported USD 20 million (INR 182-183 crores) in revenue with double-digit EBITDA margins after one-time transition costs.

    • Management expects a 1-1.5% increase in raw material costs in Q4 due to INR depreciation and natural rubber prices.

    • Replacement segment showed mid-teens growth, with high single-digit growth anticipated for FY27.

    What Changed1

    vs Q4 FY26

    Guidance items16 → 14 (-2)

    Key financials

    Single quarter

    10 metrics
    1. 01Consolidated Revenue₹4,157 Cr+26%YoY
    2. 02Standalone Revenue₹3,957 Cr+20.1%YoY
    3. 03Consolidated EBITDA₹568 Cr
    4. 04Consolidated EBITDA Margin13.7%
    5. 05Standalone EBITDA₹557 Cr

    Segment breakdown

    Replacement Segment
    15% Growth
    OEM Segment
    — Growth
    International Business
    20% Growth19.4% Saliency
    CAMSO Specialty
    20 Mn Revenue— EBITDA Margin
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹254 crores this quarter · ₹1,000 crores (FY26) planned

    new plan — additional capacity requirement · mix of debt and internal accruals

    Debt

    Gross ₹2,954 crores · 1.5x EBITDA

    Guidance & targets

    13
    CategoryTargetPriority
    Industry Growth
    Tire Industry Growth
    Healthy single-digit growth
    		High
    Demand Outlook
    MHCV Replacement Demand
    Mid- to high-single digit
    		High
    Demand Outlook
    2-wheeler Demand
    High-single digit
    		High
    Demand Outlook
    LCV Growth
    Similar to MHCV
    		High
    Raw Material Costs
    Raw Material Basket Cost Increase
    1-1.5%
    		High
    CAMSO Profitability
    CAMSO EBITDA Margin
    Double-digits
    		High
    CAMSO Profitability
    CAMSO EBITDA Margin (long term)
    20%+
    		Medium
    CAMSO Costs
    CAMSO Transition Costs
    Less than INR 2 crores
    		High
    Replacement Demand
    Replacement Segment Growth
    High single-digit
    		High
    Capacity Expansion
    Chennai Plant Capacity (existing expansion)
    30,000 tires/day
    		High
    Capacity Expansion
    Additional Chennai Plant Capacity
    30,000 to 40,000 tires/day
    		High
    Capacity Expansion
    Nagpur Factory Capacity
    100,000 tires/day
    		High
    Sustainability
    Clean Energy Share
    ~60%
    		High

    Raw Material Cost Impact

    next quarter
    CurrentExpected 1-1.5% increase in Q4
    TargetActual impact on Q4 margins

    Why it matters

    To assess the actual margin pressure from rising input costs and currency depreciation.

    We expect the margin impact to be in the range of about 1% to 1.5% in quarter 4 and beyond.

    How to verify

    key_financials.metrics[label='Standalone Gross Margin']

    Risks & concerns

    5
    RiskSeverity

    Increased Input Costs

    Increased input cost from appreciated USD and rising natural rubber prices expected to impact margins by 1-1.5% in Q4. — Management acknowledged

    medium

    U.S. Tariffs

    Tariff headwinds persisted in the U.S., preventing faster growth in international business. — Management acknowledged

    medium

    Sri Lankan Operations Challenges

    Cyclone Ditwah and intensified local competition affected Q3 performance in Sri Lanka. — Management acknowledged

    medium

    CAMSO Transition Costs

    One-time and recurring IT costs associated with the Michelin transfer impacted Q3 margins, but are not expected to repeat in Q4. — Management acknowledged

    low

    New Labor Codes Provision

    INR 57.81 crores one-time provision made for past periods related to new labor codes, with future impact expected to be minimal (less than INR 2 crores/quarter). — Management acknowledged

    low

    Q&A highlights

    8

    “We expect the margin impact to be in the range of about 1% to 1.5% in quarter 4 and beyond. While the overall cost environment is broadly favorable, we continue to keep a close watch on the RM. That is, raw material situation.”

    Clarifies the expected margin pressure from rising raw material costs and INR depreciation in the coming quarters.

    asked by Mumuksh Mandlesha

    3 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance Overview

    CEAT reported a strong Q3 FY26, with consolidated net revenue reaching INR 4,157 crores, a 26% year-on-year increase. Standalone revenue grew 20.1% YoY to INR 3,957 crores, marking the highest quarterly revenue achieved. The standalone EBITDA stood at INR 557 crores, translating to a margin of 14.08%, a 39 basis point improvement quarter-on-quarter. Standalone net profit was INR 191.6 crores, despite a one-time📎 provision of INR 57.81 crores related to new labor codes.

    02

    Segmental Performance and Market Outlook

    Volume growth for the quarter was robust at 20.9% YoY. The replacement segment grew in mid-teens, while OEM volumes saw strong growth across all segments, including double-digit growth in MHCV, farm, and truck/bus radials. The international business also grew in the 20s, contributing 19.4% to overall saliency (23% including CAMSO). Management expects the Indian tire market to achieve healthy single-digit growth through FY '31, supported by GST revisions, EV adoption, and premiumization trends.

    03

    CAMSO Business Transition and Margins

    The CAMSO Specialty business delivered its strongest performance to date in Q3 FY26, with revenue of approximately USD 20 million (INR 182-183 crores). The operating profit was in double-digits after absorbing one-time📎 transition costs, which were about 4-5% of CAMSO's revenue in Q3 and are not expected to recur from Q4. Management anticipates CAMSO's reported margins to improve to double-digits from Q4 onwards, eventually reaching 20%+ once full control of the value chain and higher capacity utilization are achieved, which is expected in 3-5 quarters.

    04

    Capital Expenditure and Capacity Expansion

    CEAT spent INR 254 crores on capex in Q3, bringing the year-to-date spend to INR 673 crores against an annual estimate of INR 1,000 crores. The Board approved a new capex of INR 1,314 crores for an additional 3.5 million tires capacity at the Chennai plant, which is separate from the ongoing expansion to 30,000 tires/day expected by Q3/Q4 FY27. The Nagpur factory is also being expanded from 80,000 to 100,000 tires per day. These expansions will be funded through a mix of debt and internal accruals, maintaining a healthy debt-to-EBITDA ratio of 1.52x.

    05

    Raw Material and Margin Outlook

    Standalone gross margin contracted by 109 basis points sequentially to 39.9%, primarily due to increased input costs from an appreciated USD and a slight rise in natural rubber prices. Management expects a 1-1.5% increase in the raw material basket cost in Q4 and beyond, mainly driven by currency depreciation and natural rubber. Despite this, the overall cost environment is broadly favorable, and the company aims to achieve a consistent margin profile over time through tight cost controls and leveraging scale.

    06

    Digitalization and Sustainability Initiatives

    CEAT is committed to becoming an AI-led organization, planning a centralized data lake and migration to SAP RISE to enhance AI capabilities and automation. Digital initiatives saw organic traffic on the website increase by 12% and premium tire sales through leads grow by 64% YoY. In sustainability, CEAT partnered with CleanMax to develop 59 megawatts of hybrid wind-solar projects, aiming for ~60% clean energy share in operations by FY '27. The Ambernath plant also received a gold medal at the 11th India Green Manufacturing Challenge.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.