CEAT Q1 FY27 Results: Revenue Jumps 22%, But Profit Slumps as Raw Material Costs Surge
CEAT Limited has started FY27 on a mixed note, delivering robust top-line growth while grappling with intense cost pressures that significantly dented profitability. The tyre manufacturer reported a strong rise in revenue for the quarter ended June 30, 2026, driven by healthy demand across key business segments and high capacity utilization. However, soaring raw material prices, coupled with inflationary pressures, weighed heavily on margins and earnings.
The company’s Board of Directors approved the unaudited financial results for the first quarter of FY27 during its meeting held on July 16, 2026.
Strong Revenue Growth Despite Challenging Cost Environment
CEAT posted consolidated revenue from operations of ₹4,318 crore during Q1 FY27, marking an impressive 22% year-on-year increase compared to ₹3,529 crore reported in the corresponding quarter last year. The growth reflects sustained demand across domestic and international markets, supported by strong production levels and efficient capacity utilization.
Despite this healthy revenue performance, profitability came under severe pressure. Consolidated net profit dropped sharply to ₹4 crore, compared to ₹112 crore in the year-ago quarter. The company’s consolidated EBITDA margin stood at 8.56%, while basic and diluted earnings per share (EPS) came in at ₹1.07.
Management attributed the steep decline in earnings primarily to rising raw material costs caused by ongoing geopolitical tensions in West Asia, which led to substantial inflation in commodity prices.
Standalone Business Remains Profitable
On a standalone basis, CEAT continued to report solid business growth. Revenue from operations increased to ₹4,163 crore, up around 18% from ₹3,521 crore in Q1 FY26.
Standalone net profit stood at ₹98 crore, lower than ₹135 crore recorded in the same quarter last year. EBITDA margin for the standalone business was 9.13%.
Total expenses rose significantly to ₹4,046 crore, largely due to higher raw material consumption costs, which climbed to ₹2,880 crore during the quarter. The sharp increase in input costs remained the biggest challenge for the company despite healthy sales growth.
Raw Material Inflation Continues to Pressure Margins
According to the management, the first quarter proved challenging for the tyre industry as commodity prices remained elevated throughout the period.
To partially offset the impact of rising costs, CEAT implemented calibrated price hikes totaling around 5% during the quarter. While these increases helped cushion some of the inflationary impact, they were insufficient to fully protect gross and operating margins.
The company also indicated that raw material inflation is expected to persist into the second quarter of FY27, suggesting that cost pressures may continue in the near term.
Additionally, the quarterly results included an exceptional expense of ₹7 crore related to compensation paid to employees who opted for the company’s Voluntary Retirement Scheme (VRS).
Capacity Expansion Approved to Support Future Growth
One of the key highlights of the quarter was CEAT’s decision to significantly expand its manufacturing capacity.
The company revealed that its existing manufacturing facilities are currently operating at nearly 95% capacity utilization, with production at the Nagpur two-wheeler tyre plant approaching full utilization.
To meet growing demand, the Board has approved a capital expenditure of ₹1,205 crore to increase manufacturing capacity by approximately 53,000 tyres per day.
The expansion project will be implemented in multiple phases and is expected to be completed by the end of FY2031. The investment will be financed through a combination of internal accruals and borrowings.
Continued Investment in Digital Business
CEAT also continued strengthening its digital presence during the quarter. The company invested an additional ₹3 crore in its wholly-owned subsidiary, TYRESNMORE Online Private Limited, reflecting its commitment to expanding online tyre retail and digital customer engagement.
Audit Review and Corporate Governance
The financial statements have been prepared in accordance with Indian Accounting Standard (Ind AS) 34 relating to interim financial reporting.
The company’s statutory auditors, B S R & Co. LLP, conducted a limited review of the quarterly results and reported that they did not identify any material misstatements requiring modification.
The Board has also recommended the reappointment of B S R & Co. LLP as the company’s statutory auditors for a second five-year term beginning in 2027, subject to shareholder approval.