CEAT's Q2 Revenue Rises 26% YoY, Profit Declines

CEAT Limited reported unaudited results for the quarter ended September 30, 2026. Consolidated revenue was Rs 4,762 crore, up 26% year-on-year, and net profit was Rs 112 crore, down about 40% from Rs 186 crore in the year-ago quarter. The company attributes the profit decline to raw material costs that stayed high because of the West Asia conflict. Compared with the previous quarter (April-June 2026), net profit rose from Rs 4 crore.

Sales Up, Margins Down

Sequentially, the consolidated cost of materials consumed rose about 39% to Rs 3,234 crore, faster than the 26% rise in revenue. EBITDA margin fell to 9.5% from 13.53%, and net profit margin to 2.36% from 4.92%. Depreciation rose to Rs 193 crore from Rs 174 crore.

Standalone results show the same pattern. Revenue rose 23% to Rs 4,548 crore, but net profit was Rs 164 crore against Rs 202 crore, and EBITDA margin was 10.14% against 13.69%. Standalone finance costs rose to Rs 96 crore from Rs 87 crore.

The year-on-year growth is not like-for-like. The Camso off-highway business, acquired through subsidiary CEAT OHT Lanka, has been consolidated since September 1, 2025, so the year-ago quarter includes only one month of it.

 Recovery from a Weak First Quarter

Against the April-June quarter, consolidated revenue rose about 10% from Rs 4,318 crore. EBITDA margin improved from 8.56% to 9.5%, and net profit margin from 0.09% to 2.36%. Standalone profit rose from Rs 98 crore to Rs 164 crore.

Arnab Banerjee, MD & CEO, said, "In Q2, we delivered a strong double-digit revenue growth of 26% Y-o-Y, continuing the momentum of the past several quarters, led by growth in premium segments across BUs. The West Asia crisis kept raw material costs high and did present challenges, but we responded with tighter cost controls and disciplined execution. In the second half of the year, we shall look at delivering double digit growth again, alongside further price hikes."

Kumar Subbiah, CFO, said, "The continuing conflict in West Asia kept commodity costs elevated during the quarter. We will remain focused on calibrated pricing actions and improving our product mix, with moderate price increases. Debt increased during the quarter, largely due to higher capital expenditure of close to ₹490 crore to increase our capacities where utilisation has been high and dividend payouts. In Q3, we expect cost pressures to persist into Q3 as the commodity prices continue to remain high. However, we will continue to maintain fiscal discipline while investing to meet demand and drive profitable growth."

For the six months to September 30, compared with the same period last year, consolidated capital expenditure was Rs 802 crore against Rs 418 crore. Net operating cash flow fell to Rs 338 crore from Rs 874 crore, with inventory build-up absorbing Rs 814 crore against Rs 510 crore.

Investments and Stock Options

Exceptional items in the quarter were Rs 13 crore, all from the Voluntary Retirement Scheme. Payouts were Rs 7 crore in the previous quarter and nil in the year-ago quarter.

During the quarter, CEAT converted a $24.5 million loan to CEAT OHT Lanka (Private) Limited into equity equivalent to Rs 234 crore. In the six months it also invested Rs 11 crore in three tranches in TYRESNMORE Online Private Limited.

It granted 74,247 options under ESOP 2025, bringing outstanding options to 165,110. The CEAT Employees Welfare Trust, funded by a Rs 51 crore company advance, holds 138,229 shares for the scheme.

CEAT is in a growth phase with strong topline momentum, but profitability is under pressure from input costs and debt servicing.