CEAT MD says demand improving across segments, margins holding steady

CEAT expects steady demand recovery across product segments following the goods and services tax (GST) cut, said Managing Director and CEO Arnab Banerjee. The company reported 11% volume growth in quarter two and believes momentum will continue through the second half of the year and into the fiscal year 2025-26 (FY26).Banerjee said farm and two-wheeler tyres are showing earlier improvement because demand is spread across smaller towns. “We are seeing positive traction in demand,” he said, with some pickup also visible in passenger and truck tyres.

Banerjee said commodity prices eased in quarter two and should remain stable through quarter three and quarter four. “We think it will kind of moderate to a stable situation,” he noted.

CEAT delivered 41% gross margin in quarter two, which Banerjee said is within its comfort range. “Whenever we operate at about 40 to 42% margin, we are comfortable,” he said.

The company aims to maintain double-digit growth consistently. Banerjee said the company’s value CAGR has been around 15%, and CEAT will “endeavour to beat that benchmark.”

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The recent Campso acquisition is set to increase international revenue share from 19–20% to 24–25%, which Banerjee called profit accretive.

• MHCV replacement demand: Expected mid-single digit growth in line with GDP trends
• MHCV OEM demand: Expected to be flat to low single digit due to the cycle
• Passenger vehicle replacement: Gradual recovery expected
• Second-half growth: 2–3% higher vs H1 despite seasonal slowdown in Jan–Feb

Banerjee said CEAT’s leverage ratios remain in control after the acquisition. Debt rose by ₹1,000 crore QoQ, but “everything is very much within our operating limits.”Also Read | Berger Paints sees return to double-digit growth next year as demand strengthens

He confirmed the company remains active in evaluating expansion options: “Short answer is, yes, we will be on the lookout of opportunity.”

Inventory levels are slightly below normal following festive demand, and capacity utilisation is above 80%, supporting ongoing brownfield investments.

CEAT has a market capitalisation of ₹15,621.83 crore. Its shares have gained more than 12% in the past year.

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