CEAT's Q2 FY27 results showed strong 26% year-on-year sales growth to ₹4,762 crore, but net profit fell 40% to ₹112 crore due to surging raw material costs that outpaced price hikes. According to latest reports, operating margins narrowed and debt increased during the quarter, leading to a 5% decline in share price following the results announcement. The mixed performance reflects the broader challenges facing the tyre industry, with natural rubber prices rising 35-40%, creating significant cost pressures across major players. As of October 16, 2026, CEAT shares are trading at ₹3,313.7 on NSE, showing continued volatility amid profitability concerns.
The company's 26% YoY sales growth to ₹4,762 crore demonstrates robust demand across key segments, as reported by multiple sources. However, net profit declined 40% to ₹112 crore due to the inability of price hikes to fully offset the impact of rising raw material prices. This profitability gap highlights the current cost pressures facing the tyre industry, with companies struggling to maintain margins despite strong revenue performance. The latest quarterly results show consolidated revenues decreased 0.1% quarter-on-quarter but witnessed 11.4% growth on a year-on-year basis, indicating mixed performance trends across different time periods.
Despite the challenging cost environment, CEAT implemented price hikes and operating cost reduction measures to help offset the impact of rising raw material prices, as reported by Motilal Oswal. The company's EBITDA margin expansion of 110 basis points was achieved through these strategic initiatives, demonstrating the effectiveness of its cost management approach. According to ICICI Securities' latest report, CEAT has taken ~13% price hike in the domestic replacement market so far and plans further hikes in the near term to fully pass on commodity costs (~27% rise over the past six months). The research firm notes that CEAT's ability to take price increases makes them positive on the stock.
According to Motilal Oswal's analysis, demand outlook remains healthy across all key segments in India, providing a positive backdrop for the company's growth trajectory. However, the research firm notes that growth moderation is expected in the second half of FY27 due to the high base effect from the previous year. The broader tyre industry faces significant headwinds, with natural rubber prices up 35-40% creating cost pressures that are impacting profitability across major players, as evidenced by CEAT's latest quarterly results. As of October 16, 2026, CEAT's market capitalization reached ₹13,033.42 crores with promoters holding 47.3% and FIIs at 13.4%.
Motilal Oswal expects margin expansion over the medium term driven by the company's control of the entire value chain and the ramp-up of CAMSO. The research firm has raised its FY27 earnings estimates by approximately 14% following the strong quarterly performance. According to ICICI Securities, while CAMSO could continue to be a drag on margins/EPS in the near term, its long-term prospects remain healthy. The brokerage maintains a BUY rating with an unchanged target price of ₹4,500, based on 15x Sept'28E EPS. As of October 16, 2026, CEAT shares have declined 8.6% over the past six months and 10.41% over the last year, with the PE ratio at 17.71 and PB ratio at 2.53, indicating current market concerns about near-term profitability despite strong fundamentals.
