CEAT share price falls on Q1 profit drop and capex plan

CEAT share price on the NSE dropped more than 9 percent on Friday after the tyre maker reported a 96 percent year on year fall in consolidated net profit to ₹4 crore for Q1 FY27, even as revenue grew 22 percent and the board cleared a ₹1,205 crore capacity expansion.

CEAT share price movement

Stock performance

Metric	Value
NSE intraday low (Jul 17, 2026)	₹3,471.10
BSE close (Jul 16, 2026)	₹3,829.30
Day change (BSE, Jul 16)	+0.91%
Market capitalisation	~₹14,346 crore

• NSE price fell to ₹3,471.10, over 9 percent lower intraday.
• BSE close a day earlier was ₹3,829.30, up 0.91 percent.
• Market capitalisation stands near ₹14,346 crore.
• The July 17 decline could be the steepest single-day fall since 2020 if losses hold.

Why the stock moved

Earnings and margin pressure

Metric	Q1 FY27	Q1 FY26	Change
Consolidated net profit	₹4 crore	₹112 crore	-96%
Consolidated revenue	₹4,318 crore	₹3,529, 3,534 crore	+22%
EBITDA	₹365 crore	₹387 crore	-5.7%
EBITDA margin	8.5%	11.0%	-250 bps
Exceptional items	₹7 crore	NA	NA

• Consolidated profit dropped to ₹4 crore, down 96 percent year on year.
• Revenue rose to about ₹4,318 crore, a 22 percent increase versus last year.
• EBITDA declined to ₹365 crore, with margin compressing to 8.5 percent.
• Exceptional items of ₹7 crore were recorded in the quarter.
• Higher raw material costs linked to the West Asia crisis weighed on margins.

Standalone performance

Metric	Q1 FY27	Q1 FY26	Change
Standalone revenue	₹4,163 crore	₹3,521 crore	+18%
Standalone net profit	₹98 crore	₹135 crore	-27%
Standalone EBITDA margin	9.13%	NA	NA

• Standalone revenue rose 18 percent to ₹4,163 crore.
• Standalone profit fell to ₹98 crore, a 27 percent decline year on year.
• Standalone EBITDA margin stood at 9.13 percent.
• Profit erosion was milder on standalone basis than consolidated.

Broker and technical commentary

Item	Detail
Motilal Oswal rating	Buy
Motilal Oswal FY27E P/E	25.2x
Motilal Oswal FY28E P/E	16.3x
Reported consolidated profit vs estimate	₹4 crore vs ₹50.2 crore
Net sales YoY growth (broker view)	22.3% to ₹4,320 crore

• Motilal Oswal said earnings were well below expectations due to higher interest costs.
• The brokerage noted net sales growth above its estimates, driven by volume gains.
• International business was described as the fastest growing segment year on year.
• The brokerage maintained a Buy rating, citing long-term growth support from capex.

Technical levels

Metric	Level
Immediate resistance zone	₹3,670, ₹3,700
Key moving averages breached	20-day and 50-day EMAs

• The stock slipped below its 20-day and 50-day EMAs, turning technically weak.
• Resistance is seen near ₹3,670, ₹3,700, aligned with the 20-day EMA.
• Momentum indicators, including RSI and ADX, are signalling stronger downside.

Key event: ₹1,205 crore capacity expansion

Expansion plan

Item	Details
Segment	Two-wheeler tyres
Current capacity	~80,000 tyres per day
Planned additional capacity	~53,000 tyres per day
Future total capacity	~1.33 lakh tyres per day
Capex value	₹1,205 crore
Completion timeline	By end of FY31, in phases
Funding mix	Internal accruals and debt
Q1 FY27 capex spend	₹293, ₹300 crore
Q1 FY27 debt level	₹3,240 crore (vs ₹3,000 crore prior quarter)
Debt-to-equity ratio	0.65x
Capacity utilisation	~95%

• Board approved ₹1,205 crore capex to expand two-wheeler tyre capacity.
• Daily capacity is planned to rise by 53,000 tyres to about 1.33 lakh.
• The project will be executed in phases and targeted for completion by FY31.
• Funding will come from internal accruals and additional borrowing.
• Q1 capex was around ₹293, ₹300 crore, largely for capacity enhancement.
• Debt increased to about ₹3,240 crore, lifting leverage to 0.65 times.
• Existing plants are running at roughly 95 percent utilisation, supporting expansion.

Management commentary

CEO view

Executive	Role	Key points
Arnab Banerjee	MD and CEO	Raw material inflation, pricing response, demand strength

• Arnab Banerjee called Q1 a challenging quarter for the tyre industry.
• He linked margin pressure to raw material cost inflation from the West Asia crisis.
• CEAT implemented calibrated price increases to partially offset cost spikes.
• He noted 22 percent revenue growth supported by demand across segments.
• High capacity utilisation was cited as a sign of strong underlying demand.
• The company plans a disciplined pricing approach in Q2, focusing on profitable growth.

CFO view

Executive	Role	Key points
Kumar Subbiah	CFO	Commodity inflation, pricing actions, cost control

• Kumar Subbiah said commodity inflation due to the West Asia war hit raw material costs.
• He noted cumulative price hikes of about 5 percent to mitigate margin impact.
• Raw material costs are expected to stay elevated in Q2.
• Management plans to balance pricing actions with cost prudence to protect margins.
• Around ₹300 crore capex in Q1 was directed at capacity additions.
• Discretionary and routine capex are being tightly controlled to conserve cash.

Business context

Operating and balance sheet metrics

Metric	Q1 FY27	Prior period	Comment
Net working capital	₹138 crore	Higher sequentially	Working capital increased
Debt	₹3,240 crore	₹3,000 crore	Debt rose during quarter

• Net working capital rose to ₹138 crore, indicating higher capital tied in operations.
• Debt increased by about ₹240 crore quarter on quarter.
• The company is balancing growth capex with leverage and cash conservation.

Share performance history

Period	Return
1 month	-10%
Year to date 2026	-6%
1 year	-8%
3 years	+45%
5 years	+145%
Current P/E	~27x

• Shares are down around 10 percent over the past month.
• Year to date performance in 2026 shows a 6 percent decline.
• One-year return is negative 8 percent.
• Longer term, shares gained 45 percent over three years and 145 percent over five.
• The stock trades at about 27 times trailing earnings.

What investors are watching

Key variables ahead

Factor	Why it matters
Raw material costs	Direct driver of margins and profitability
Pricing power	Ability to pass on cost inflation to customers
Capex execution	Timely addition of two-wheeler capacity by FY31
Leverage levels	Impact of debt-funded expansion on balance sheet
Demand trends	Sustainability of double-digit revenue growth

• Investors will track raw material trends linked to the West Asia conflict.
• Further price increases and their impact on volumes will be closely watched.
• Execution of the ₹1,205 crore expansion within budget and timelines is critical.
• Debt trajectory and interest costs remain central to earnings recovery.
• The next major catalyst is CEAT’s subsequent quarterly results and capex progress updates.

Frequently Asked Questions

Why did CEAT share price fall sharply today?

CEAT share price on the NSE fell more than 9 percent after the company reported a 96 percent year on year drop in consolidated net profit to ₹4 crore for Q1 FY27. The decline came despite 22 percent revenue growth, as margins were hit by raw material cost inflation linked to the West Asia crisis and higher interest costs, prompting a negative reaction from the market.

How did CEAT perform in Q1 FY27 in terms of earnings and margins?

In Q1 FY27, CEAT’s consolidated revenue rose 22 percent to about ₹4,318 crore, but consolidated net profit fell to ₹4 crore from ₹112 crore a year earlier. EBITDA declined to ₹365 crore, with margin compressing to 8.5 percent from 11 percent. On a standalone basis, revenue grew 18 percent to ₹4,163 crore, while net profit dropped 27 percent to ₹98 crore and EBITDA margin stood at 9.13 percent.

What is CEAT’s ₹1,205 crore expansion plan and how will it be funded?

CEAT’s board has approved a ₹1,205 crore capital expenditure plan to expand manufacturing capacity in the two-wheeler tyre segment. The company intends to add about 53,000 tyres per day, taking total daily capacity to roughly 1.33 lakh tyres by the end of FY31, with implementation in phases. The investment will be funded through a mix of internal accruals and debt, and comes as existing facilities operate at around 95 percent utilisation.