Ceat's profit collapses to ₹4 cr as raw material costs surge
Revenue rose 22% to ₹4,318 crore in the June quarter, but net profit plunged from ₹112 crore a year ago. Management has taken 5% price hikes and warns of continued margin pressure.
— 1 earlier story on Ceat Ltd. →What's new
- Net profit collapsed to just ₹4 crore, down 96% YoY, despite 22% revenue growth.
- Cumulative price increases of 5% have been taken to offset raw material inflation from the West Asia conflict.
- Board approved ₹1,205 crore two-wheeler capacity expansion; auditors reappointed for five years.
Why this matters
A 22% revenue jump should have delivered healthy profits; instead, raw material inflation nearly wiped out earnings. The 5% price hikes are a start, but margins are likely to stay under pressure in the current quarter. The capex signals long-term confidence, but near-term pain is real for a company with a trailing P/E of 20.2.
What we're watching
- Whether raw material costs ease or price hikes accelerate in Q2.
- Execution of the ₹1,205 crore two-wheeler capacity plan.
- Monsoon demand for replacement tyres and any volume impact.
The full read
Top line up 22%. Ceat's revenue hit ₹4,318 crore in the June quarter, but net profit crashed to just ₹4 crore from ₹112 crore a year ago — a 96% drop. The culprit is raw material cost inflation from the West Asia conflict. Management has raised prices 5% cumulatively, yet warns margins will stay under pressure in Q2. Meanwhile, the board approved a ₹1,205 crore two-wheeler capacity expansion, a long-term bet that does little to ease near-term pain. For a stock trading at a trailing P/E of 20.2x, this profit collapse resets expectations. Hardly a quarter to ignore.
Questions answered
- Why did Ceat's profit fall so sharply despite higher revenue?
- Raw material costs surged due to the West Asia conflict, compressing margins. Net profit dropped to ₹4 crore from ₹112 crore a year ago, even as revenue grew 22% to ₹4,318 crore.
- How is Ceat responding to the cost pressure?
- The company has taken cumulative price increases of 5% and is reviewing further hikes. However, management has warned that margins will remain under pressure in the current quarter.
- What is the ₹1,205 crore capex for?
- The board approved a two-wheeler capacity expansion plan, indicating a long-term bet on that segment despite the current profit squeeze. The project was likely under discussion and not entirely new.
- Is the auditor change significant?
- No. B S R & Co. LLP has been reappointed for a second five-year term starting 2027 — a routine governance item with no price-sensitive implications.
- How does this quarter compare to the same quarter last year?
- Revenue improved from about ₹3,540 crore to ₹4,318 crore, but net profit collapsed from ₹112 crore to just ₹4 crore, a 96% decline.
Story so far
All notes on CEATLTD →- 16 Jul 2026 · 7:33 PM IST Ceat's profit collapses to ₹4 cr as raw material costs surge
- today Ceat bets ₹1,205 cr on two-wheeler tyre capacity as demand tests utilisation