Ceat (500878) Q1 26/27 earnings summary

Executive summary

• Q1 FY27 consolidated revenue rose 22.3% YoY to Rs. 4,318 crore, with standalone revenue up 18.2% YoY and 3.2% QoQ, driven by robust demand across segments despite significant raw material cost inflation and geopolitical tensions.

• Margin pressure persisted due to a 16%-18% surge in raw material costs, rupee depreciation, and supply chain disruptions, leading to EBITDA margin contraction to 8.6% and net profit dropping to Rs. 4 crore.

• International business grew nearly 30% YoY and was the fastest growing segment, with premiumization and electrification trends gaining traction.

• Camso business faced negative margins in Q1 due to transition costs and currency impact, but customer migration is progressing and expected to improve H2 performance.

• Achieved #4 global tyre brand ranking, EcoVadis Gold Medal for sustainability, and recognition for governance and compliance.

Financial highlights

• Consolidated revenue: Rs. 4,318 crore (+22.3% YoY, +2.4% QoQ); Standalone revenue: Rs. 4,163 crore (+18.2% YoY, +3.2% QoQ).

• Standalone EBITDA: Rs. 380 crore (9.1% margin); Consolidated EBITDA: Rs. 370 crore (8.6% margin), both margins contracted sequentially and YoY.

• Standalone PAT: Rs. 98 crore; Consolidated PAT: Rs. 4 crore, impacted by Rs. 48 crore currency loss in Sri Lanka.

• Gross margin contracted by 575 bps QoQ to 33.9% due to higher input costs.

• Finance costs rose 71.9% QoQ and 77.4% YoY to Rs. 146 crore.

Outlook and guidance

• Margin pressure expected to persist in Q2 due to continued high raw material costs and currency volatility.

• Further price hikes planned in July and August to offset cost increases, with 11% already implemented in replacement and more expected.

• Demand expected to moderate in Q2 but remain resilient, with rural and OEM demand strong and international order base robust.

• Camso business expected to improve in H2 as customer transition completes and direct servicing ramps up.

• Disciplined approach to pricing and focus on profitable growth will continue.