CEAT — Q3 FY26 earnings call

Call held 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

  • 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.

Key financials

  1. Consolidated Revenue ₹4,157 Cr +26%YoY
  2. Standalone Revenue ₹3,957 Cr +20.1%YoY
  3. Consolidated EBITDA ₹568 Cr
  4. Consolidated EBITDA Margin 13.7%
  5. Standalone EBITDA ₹557 Cr
  6. Standalone EBITDA Margin 14.1%
  7. Consolidated PAT ₹155.4 Cr
  8. Standalone PAT ₹191.59 Cr
  9. Standalone Gross Margin 39.9% -1.1%QoQ
  10. Volume Growth 20.9%

What they filed

Q1 FY27: revenue up 22.4%, net profit down 96.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,305 3,300 3,421 3,529 3,773 +14%4,157 +26%4,219 +23%4,318 +22%
EBITDA362 341 388 387 503 +39%563 +65%593 +53%365 −6%
Net profit121 97 99 112 186 +53%155 +60%244 +147%4 −96%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

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

Capital allocation

high confidence
  • Capex ₹254 Cr this quarter · ₹1,000 Cr (FY26) planned New plan — additional capacity requirement · mix of debt and internal accruals
    • Additional passenger car tire capacity at Chennai plant ₹1,314 Cr
    • Chennai plant capacity expansion (existing)
    • Nagpur factory capacity expansion
    The capex would be funded with a mix of debt and internal accruals as we have been doing in the past.
  • Debt Gross ₹2,954 Cr · 1.5× EBITDA
    • New borrowing Raised NCDs ₹250 Cr
    • Repayment Retired debt ₹100 Cr
    Our stand-alone gross debt stood at INR2,954 crores against INR2,944 crores as of end September. During the quarter, the company raised about INR250 crores of NCD, that is non-convertible debentures from the market and retired about INR100 crores. Both are part of the current debt. Our debt-to-EBITDA on a stand-alone basis stands at a healthy level of 1.52x, which compares favorably with 1.65x that we reported for the previous quarter and our debt-to-equity also improved from about 0.65 to 0.63.

Guidance & targets

Industry Growth

  • Tire Industry Growth Industry Growth · through FY '31 (next 5 years) · High confidence Healthy single-digit growth
    Overall, we believe that supportive tax policies, increasing EV adoption and ongoing premiumization trends are likely to position the tire industry for a healthy single-digit growth through FY '31, i.e. next 5 years.

    — Arnab Banerjee

Demand Outlook

  • MHCV Replacement Demand Demand Outlook · near term · High confidence Mid- to high-single digit
    In the near term, we expect replacement demand for MHCVs to be mid- to high-single digit.

    — Arnab Banerjee

  • 2-wheeler Demand Demand Outlook · near term · High confidence High-single digit
    For 2-wheeler, demand has been encouraging, and growth could be high-single digit.

    — Arnab Banerjee

  • LCV Growth Demand Outlook · Q3 · High confidence Similar to MHCV
    LCV growth is expected to be similar.

    — Arnab Banerjee

Raw Material Costs

  • Raw Material Basket Cost Increase Raw Material Costs · Q4 and beyond · High confidence 1-1.5%
    We expect the margin impact to be in the range of about 1% to 1.5% in quarter 4 and beyond.

    — Kumar Subbiah

CAMSO Profitability

  • CAMSO EBITDA Margin CAMSO Profitability · Q4 onwards · High confidence Double-digits
    I think you would be able to see that margin visible in the reported numbers from quarter 4 onwards, that double-digit kind of a number because we are unlikely to incur those costs starting from January.

    — Kumar Subbiah

  • CAMSO EBITDA Margin (long term) CAMSO Profitability · when full control and utilization · Medium confidence 20%+
    That will come when we take complete control of customers as well as the material supply at the back end and we start improving the capacity utilization of the factory, which is currently standing at 50%. When the volume traction comes, yes, it should move up from mid-teens to around 20%.

    — Arnab Banerjee

CAMSO Costs

  • CAMSO Transition Costs CAMSO Costs · per quarter going forward · High confidence Less than INR 2 crores
    Say less than INR2 crores per quarter. About INR1 crores or INR2 crores per quarter.

    — Kumar Subbiah

Replacement Demand

  • Replacement Segment Growth Replacement Demand · through FY '27 · High confidence High single-digit
    I think so. We can expect high single-digit growth in replacement through FY '27.

    — Arnab Banerjee

Capacity Expansion

  • Chennai Plant Capacity (existing expansion) Capacity Expansion · by Q3 or Q4 of coming financial year · High confidence 30,000 tires/day
    So what we announced in the month of July was taking our capacity to about 30,000 tires per day. And that is under implementation. We hope to complete that execution in the coming financial year, by quarter 3 or quarter 4 of coming financial year.

    — Kumar Subbiah

  • Additional Chennai Plant Capacity Capacity Expansion · a year later than first expansion · High confidence 30,000 to 40,000 tires/day
    This 30,000 tires to 40,000 tires is over and above that, which will get completed maybe a year later.

    — Kumar Subbiah

  • Nagpur Factory Capacity Capacity Expansion · High confidence 100,000 tires/day

    Previously 80,000 tires/day → 100,000 tires/day

    Along with this, we are also expanding our Nagpur factory, taking the capacity from 80,000 tires to 100,000 tires per day.

    — Kumar Subbiah

Sustainability

  • Clean Energy Share Sustainability · by FY '27 · High confidence ~60%
    This marks a significant step in advancing our aim towards achieving ~60% clean energy share in operations by FY '27.

    — Arnab Banerjee

Market context

  • Passenger Segment Growth Demand Outlook · near term · High confidence Double digit
    In passenger segment, near-term growth is expected to be in double digit with strong revival aided by consumer preference towards smaller vehicles and easing financing access.

    — Arnab Banerjee

What to watch in Q4 FY26

Raw Material Cost Impact

next quarter
Current Expected 1-1.5% increase in Q4
Target Actual 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.

Risks & concerns

  • Increased Input Costs

    medium

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

    Management acknowledged

  • U.S. Tariffs

    medium

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

    Management acknowledged

  • Sri Lankan Operations Challenges

    medium

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

    Management acknowledged

  • CAMSO Transition Costs

    low

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

    Management acknowledged

  • New Labor Codes Provision

    low

    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

Q&A highlights

8 direct
Raw Material Cost Impact Direct
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

Labor Code Impact Direct
Say less than INR2 crores per quarter. About INR1 crores or INR2 crores per quarter.

Quantifies the minimal ongoing impact of new labor codes after the one-time provision, reassuring investors about future profitability.

Asked by Mumuksh Mandlesha

CAMSO Q3 Financial Performance Direct
So the operating numbers are as expected. The top line is as per expected... The top line for the quarter is roughly at USD20 million, which is INR182 crores, INR183 crores. ... I think double digit EBITDA margin, sir, operating profit, right, sir? Yes.

Provides specific revenue and confirms double-digit EBITDA margins for the newly acquired CAMSO business, indicating successful initial integration.

Asked by Mumuksh Mandlesha

CAMSO Margin Normalization and Transition Direct
I think you will see that from quarter 4 onwards, resultant reported margins will be in line... That will come when we take complete control of customers as well as the material supply at the back end and we start improving the capacity utilization of the factory, which is currently standing at 50%. When the volume traction comes, yes, it should move up from mid-teens to around 20%.

Outlines the timeline and conditions for CAMSO's margins to reach full potential (20%+) and confirms double-digit margins from Q4.

Asked by Rishi Vora

New Chennai Capex Clarification Direct
No, this is independent of that. So what we announced in the month of July was taking our capacity to about 30,000 tires per day. And that is under implementation. We hope to complete that execution in the coming financial year... This 30,000 tires to 40,000 tires is over and above that, which will get completed maybe a year later.

Clarifies that the recently approved INR 1,314 crores capex is *additional* to a prior Chennai expansion, indicating a larger overall capacity build-out than previously understood.

Asked by Mihir Vora

Replacement Segment Demand Outlook Direct
I think so. We can expect high single-digit growth in replacement through FY '27.

Provides clear forward guidance on the expected growth rate for the crucial replacement segment for the next fiscal year.

Asked by Rishi Vora

CAMSO One-Time Expense Quantification Direct
Okay. See, look, overall for the quarter, it would have been about 4% to 5% of the revenue, was the kind of expenses that we incurred in quarter 3 that we wouldn't incur in quarter 4 onwards.

Quantifies the one-time transition costs for CAMSO in Q3, providing clarity on the non-recurring nature of these expenses and their impact on margins.

Asked by Vignesh Iyer

MHCV Demand Sustainability Direct
OEM, it has shifted towards 16-wheelers as you know... strong growth as well, high double digit, in fact, in OEM. ... In replacement as well, the tires for small commercial vehicle... is growing at a high single digit and we expect this growth rate to accelerate because the summer season is the big season for this. ... this cycle should last a few more quarters, maybe 2 to 3 quarters, up to June, definitely is what I think.

Offers detailed insights into the MHCV segment, including OEM shifts, strong LCV/small CV growth, and a positive outlook for replacement demand driven by seasonality.

Asked by Mihir Vora

3 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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