CEAT shares declined nearly 4% on Thursday, October 15, trading at ₹3,238.5 apiece on the NSE, slipping over 3.6% intraday compared to its previous close at ₹3,357.9. The stock was under pressure as investors reacted to the company's disappointing second quarter results, with the Nifty 50 gaining over 1% on the same day. The tyre maker's stock has been under pressure for over a year now, with declining over 9% during the period. Currently, the stock is trading at a price-to-earnings multiple of 26.36 times, with a market capitalisation of ₹13,166 crore. Investors will track the company's ability to improve margins and restore profit growth amid rising revenue in coming quarters.
According to latest reports, CEAT reported a 39.8% year-on-year decline in consolidated net profit to ₹112 crore for the second quarter of FY27, compared with ₹186 crore in the year-ago period. Despite strong revenue growth, elevated raw material costs significantly impacted profitability. Revenue from operations rose 26.2% YoY to ₹4,762 crore from ₹3,773 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 9.1% to ₹457 crore from ₹503 crore a year earlier. The EBITDA margin contracted to 9.6% from 13.3% in the corresponding quarter last year, with the divergence between strong volume-driven revenue growth and shrinking margins highlighting the impact of commodity inflation. The results reflect the divergence between revenue growth and profitability, with the company's earnings declining despite higher sales.
As reported by CNBC TV18, the company incurred a one-time cost of ₹13 crore towards voluntary retirement schemes during the quarter. CEAT Managing Director and Chief Executive Officer Arnab Banerjee stated that the company sustained its revenue momentum, driven by growth in premium segments across business units, even as geopolitical tensions kept raw material costs elevated. The West Asia crisis kept raw material costs high and presented challenges, but the company responded with tighter cost controls and disciplined execution. On a standalone basis, CEAT reported revenue of ₹4,548 crore, up 23% year-on-year, with EBITDA margin at 10.14% and net profit at ₹164 crore.
Separately, CEAT appointed Sumeet Narang as an Additional Director in the capacity of Non-Executive, Independent Director for a five-year term from October 14, 2026, to October 13, 2031, subject to shareholder approval. This appointment comes as part of the company's governance strengthening initiatives amid the challenging operating environment.
According to CNBC TV18, Chief Financial Officer Kumar Subbiah indicated that the continuing conflict in West Asia had kept commodity costs elevated and that the company would focus on pricing and product mix to manage the pressure. The company will remain focused on calibrated pricing actions and improving product mix, with moderate price increases. Looking ahead, Banerjee said the company would seek to sustain growth in the second half of the financial year, alongside further price increases. CEAT spent close to ₹490 crore on capital expenditure, primarily to expand capacity in areas where utilisation has been high, which contributed to increased debt levels during the quarter. The company disclosed that debt levels increased during the quarter, largely due to higher capital expenditure and dividend payouts.
