CEAT Q1FY26 profit drops 28% despite revenue growth; to invest ₹450 cr in Chennai plant expansion
Tyre manufacturer CEAT Ltd on Thursday (July 17) reported a 27.7% drop in net profit for the first quarter of FY25, which fell to ₹112 crore from ₹154 crore in the same period last year, despite strong gains in revenue and volume.
The RPG Group company's revenue rose 10.5% year-on-year to ₹3,529 crore, up from ₹3,193 crore in Q1 FY24, buoyed by solid performance in both the Original Equipment Manufacturer (OEM) and replacement markets.
EBITDA inched up by 1.3% to ₹387 crore. However, EBITDA margin narrowed to 11% from 12% a year earlier, primarily due to increased spending on marketing.
Domestic demand remained robust, with healthy volume growth across key OEM categories and a stable replacement segment.
On the other hand, the international business remained flat year-on-year, hindered by persistent macroeconomic challenges.
CEAT also unveiled a capital expenditure plan of about ₹450 crore to expand capacity at its Chennai facility located at Kannanthangal, Maduramangalam Post, Sriperumbudur Taluk in Kancheepuram.
The plant currently operates at 80% capacity, producing roughly 70 lakh tyres annually. The expansion is expected to boost production capacity by around 35%, specifically in the Passenger Car Utility Vehicle (PCUV) segment.
The company aims to complete the expansion by the end of FY27.
The investment will be funded through a mix of internal accruals and debt. CEAT sees strong medium-term demand in the PCUV category and plans to scale up production accordingly.
Commenting on the results, Arnab Banerjee, MD & CEO, CEAT Limited, said, “We continue to grow at a strong pace with double-digit growth in top-line, driven by OEM and replacement segments. Looking ahead, we are well poised to ride the premiumisation and electrification trend in domestic market, and renew our growth in international markets with stability in geopolitical situation.”
Kumar Subbiah, CFO of CEAT Limited, said, “Q1 saw strong growth and high-capacity utilisation at all our manufacturing facilities.
This growth came on the back of increase in demand from OEM and replacement segments. As Q1 is a marketing heavy quarter with significant marketing costs associated with IPL, operational margins saw a slight dip.
Efficient cash flow management helped in gross debt coming down by ₹100 crore during the quarter.”
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