ICICI Securities has upgraded CEAT from 'Add' to 'Buy' with a revised target price of ₹4,300, up from the previous target of ₹4,200. According to the research report dated July 20, 2026, the upgrade is based on 15x FY28E EPS valuation. The brokerage maintains a bullish outlook on the stock despite Q1FY27 operating performance that fell short of estimates. Motilal Oswal has also issued a 'Buy' rating with a target price of ₹4,228, based on approximately 18x FY28E EPS valuation, as reported in their July 17, 2026 research report.
CEAT has implemented approximately 11% price hike in the domestic replacement market and plans another 4-5% price increase in the near term to fully offset commodity cost pressures. As reported by ICICI Securities, commodity costs have risen steeply by 25% over the last two quarters, necessitating these pricing adjustments to maintain margins. The company expects margins to have bottomed out and could gradually improve going forward. Motilal Oswal notes that while margins are likely to remain under pressure in the near term, they expect gradual revival in 2H as input costs cool off and price hikes offset cost pressure.
Despite expected moderation in industry tonnage growth, ICICI Securities expects CEAT to outperform led by continued market share gains. The brokerage notes that while industry tonnage growth is anticipated to slow, CEAT's strategic positioning and operational improvements should enable it to maintain competitive advantages. The company's export outlook remains positive, supported by healthy recovery in key markets including EU, US, and LATAM regions. Motilal Oswal confirms that demand outlook continues to remain healthy across all key segments in India, providing a positive backdrop for the company's performance.
While CAMSO continues to impact margins and EPS in the near term, ICICI Securities believes its long-term prospects remain healthy. The brokerage acknowledges that CAMSO's current performance is creating pressure on overall margins and earnings, but maintains confidence in the subsidiary's long-term growth potential. Motilal Oswal expects Camso's performance to start improving in 2H as it gains full control of operations, which should contribute to the overall margin recovery. This assessment forms part of the overall positive outlook for CEAT's strategic direction.
Motilal Oswal has cut FY27 earnings by 22% to factor in the sharp rise in interest burden in Q1, while maintaining FY28E earnings estimates unchanged. The brokerage expects margins to gradually improve in the second half as input costs moderate and pricing actions take effect. ICICI Securities identifies volatility in raw material basket as a key near-term monitorable factor for CEAT's performance. According to the research report, fluctuations in raw material costs could impact the company's ability to maintain pricing power and margin recovery, particularly given the significant commodity cost increases experienced in recent quarters.
