CEAT's net profit fell by 40% in the second quarter of fiscal year 2027, even as its revenue from operations grew by 26% compared to the same period last year. The company faced higher commodity costs due to ongoing conflicts in West Asia, which affected its profitability.
- Revenue from operations increased to ₹4,762 crore, up 26% year-on-year.
- Net profit declined by 40% to ₹164 crore on a standalone basis.
- EBITDA margin contracted from 13.33% to 9.60% year-on-year.
- Half-year net profit dropped 61% to ₹116 crore.
- Commodity cost pressures are expected to continue into Q3 FY27.
What caused CEAT's net profit to drop despite higher revenue?
CEAT's revenue from operations rose to ₹4,762 crore in Q2 FY27, a 26% increase from ₹3,773 crore in Q2 FY26. However, the net profit fell by 40% to ₹164 crore on a standalone basis. The main reason for this decline was the elevated commodity costs driven by the continuing conflict in West Asia. These higher raw material costs squeezed the company's earnings before interest, taxes, depreciation, and amortisation (EBITDA), which fell 9% year-on-year to ₹457 crore. The EBITDA margin also contracted from 13.33% to 9.60%.
How did CEAT perform in the first half of FY27?
For the first half of fiscal year 2027, CEAT's net profit declined by 61% to ₹116 crore compared to ₹298 crore in the same period last year. Despite this, revenue from operations grew by 24% to ₹9,080 crore from ₹7,302 crore in H1 FY26. The company’s standalone revenue was ₹4,548 crore in Q2 FY27, showing a 23% increase year-on-year, with an EBITDA margin of 10.14%.
What strategies is CEAT adopting to manage cost pressures?
CEAT's Chief Financial Officer, Kumar Subbiah, stated that the company plans to focus on calibrated pricing actions, improving its product mix, and moderating price increases to manage the elevated commodity costs. The company also invested close to ₹490 crore in capital expenditure to expand capacity, addressing high utilisation levels. Despite increased debt due to these investments and dividend payouts, CEAT aims to maintain fiscal discipline while investing to meet demand and drive profitable growth.
What is the outlook for CEAT in the coming quarters?
CEAT expects cost pressures to persist into the third quarter of FY27 as commodity prices remain high. However, the company plans to continue disciplined execution and tighter cost controls. Arnab Banerjee, MD & CEO of CEAT Limited, expressed confidence in delivering double-digit growth in the second half of the year, supported by further price hikes.
Were there any significant corporate developments during this period?
Alongside the earnings announcement, CEAT's board approved the appointment of Sumeet Narang as an additional non-executive independent director for a five-year term from October 14, 2026, to October 13, 2031.
How did the stock market respond to CEAT's Q2 FY27 results?
On October 14, 2026, CEAT shares closed at ₹3,357.90 on the National Stock Exchange, marking a 2.03% increase. The company’s market capitalization stood at ₹13,582.74 crore.
