Price hikes to drive margin recovery in 2HFY27F: Focus on premium segments, exports to drive growth; price hikes to pass on steep near-term commodity costs

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Price hikes to drive margin recovery in 2HFY27F: Focus on premium segments, exports to drive growth; price hikes to pass on steep near-term commodity costs

Global Markets Research

CEAT CEAT.NS CEAT IN 19 July 2026

EQUITY: AUTOS & AUTO PARTS

RatingPrice hikes to drive margin recovery in 2HFY27F Remains Buy

Target priceFocus on premium segments, exports to drive growth; Reduced from INR INR 4,266price hikes to pass on steep near-term commodity costs 4,276

1QFY27 EBITDA below both our and Bloomberg consensus estimates Closing17 July 2026price INR 3,550

CEAT’s 1Q revenue at INR43.2bn (+22% y-y; Fig.1) was ~2% below our/consensus

estimates. EBITDA margin was slightly below at 8.5% (Nomura: 8.7%; consensus: 8.8%), Implied upside +20.2%

leading to EBITDA of INR3.7bn, -6% y-y, impacted by a weak Camso. APAT at

~INR0.1bn was impacted by adverse currency impact on forex loans for Camso. Market Cap (USD mn) 1,491.5

Standalone performance was in line, with 18% revenue growth and 9.1% margins. Net ADT (USD mn) 8.2

debt increased by INR~2bn q-q to INR32.4bn.

Relative performance chartManagement commentary: 1Q volumes grew 13-14% y-y, with replacement in mid-teens while

OEM in low teens. It expects replacement to moderate to single-digit growth. >17inch PV tyres

share has increased to >20% for Ceat. Margins: RM is likely to be up by 8-10% q-q in 2Q. It

already took cumulative price hikes of ~7%/3%/5% in replacement/OEM/exports in 1Q, double-digit

hike till July in OE and is considering another 4-6% in July/Aug for replacement/exports. Camso:

1Q revenue was ~USD10mn and expects business normalisation from 3Q as it gets customer

control from Michelin. Capex: With 2W capacity utilisation at ~95%, it approved ~INR12bn capex

for 2W till FY31 implying ~INR65mn capex per TPD.