CEAT Shares Slip Over 7% After Q1 Profit Plunges 96%
· Free Press Journal
Shares of tyre manufacturer CEAT Ltd witnessed heavy selling pressure on Friday after the company reported a steep decline in its June-quarter earnings.
The stock fell more than 7% as investors reacted to a sharp fall in profitability caused by elevated raw material costs, despite strong growth in revenue.
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CEAT shares were trading at around Rs 3,545, down 7.43% in morning trade after declining as much as 9.4% during the session.
The stock emerged among the biggest losers on the BSE Smallcap index. So far in 2026, CEAT shares have fallen 6.1%, compared with a 7.2% decline in the benchmark Nifty 50 index. The company’s market capitalisation stands above Rs 14,350 crore.
Too Early To Confirm Sustained Rise In Small Car Demand Post-GST 2.0, SUVs Still Dominate: CEAT MD Arnab BanerjeeThe tyre maker reported a consolidated net profit of just Rs 4 crore for the April-June quarter, marking a sharp 96.4% decline compared with Rs 112 crore recorded in the same period last year.
While the company witnessed healthy sales growth, higher input costs affected overall profitability. Revenue from operations increased 22.4% year-on-year to Rs 4,318 crore from Rs 3,529 crore in the previous year’s corresponding quarter.
However, earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 5.7% to Rs 365 crore. The EBITDA margin also contracted significantly to 8.5% from 11% a year earlier, highlighting pressure on operating profitability.
CEAT attributed the margin decline to higher raw material expenses, which were impacted by geopolitical uncertainties, including the West Asia crisis. The increase in input costs offset the benefits of higher sales during the quarter.
Tyre Maker CEAT Crafting Tyres To Unlock Exports To Europe & US, Cementing Dominance As A Global BrandDespite the weak financial performance, the company announced a major investment plan aimed at strengthening its manufacturing capacity. The company’s board approved capital expenditure of Rs 1,205 crore to expand production facilities at its Nagpur plant.
The expansion project is expected to increase the plant’s production capacity by nearly 53,000 tyres per day.
CEAT currently has an installed manufacturing capacity of around 80,000 tyres per day, excluding additional capacity already under development. The company’s overall capacity utilisation is currently around 95%.
The company said the expansion is necessary as its existing two-wheeler tyre manufacturing capacity at the Nagpur facility is nearing full utilisation. The investment is part of CEAT’s long-term strategy to meet rising demand and ensure adequate production capability.
In a regulatory filing, CEAT stated that the company plans to enhance manufacturing capacity through greenfield and brownfield expansion projects based on internal assessments and future requirements.
The investment comes as the tyre industry faces challenges from volatile commodity prices, particularly for key inputs such as rubber and crude-linked materials. While demand remains strong across segments, companies are facing pressure to protect margins amid rising costs.
CEAT’s management expects capacity expansion to support future growth, but investors remain focused on the company’s ability to manage input costs and restore profitability in the coming quarters.