CEATLTD Q1 FY27 earnings call.
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Revenue
₹4,318 Cr
verified against source
Revenue YoY
18.2%
reported change
EBITDA
₹380 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
CEAT delivered 18.2% revenue growth to ₹4,063 crore in Q1 FY27, driven by 13-14% volume growth across replacement, OEM, and international segments. However, EBITDA declined 2.8% YoY to ₹380 crore with margins contracting 440bps to 9.1% as raw material costs surged 15-16% sequentially—natural rubber prices at 15-year highs of ₹280/kg and crude oil averaging above $100/bbl in April-May. PAT fell 27% to ₹98 crore. Management has taken 11% cumulative price hikes in replacement (more than double the typical quantum) with another 4-6% targeted for Q2. CAMSO integration continues—60% customer transition completed, full control expected by Q3 FY27 when EBITDA margins should normalize. Capex guidance maintained at ₹1,300-1,400 crore for FY27. Near-term risk is margin pressure persisting into Q2 given lag between cost increases and price realization, plus demand moderation risk from below-normal monsoon and El Nino conditions.
Colored figures show movement against the previous available record.
Guidance to track
- Despite some crude oil correction, natural rubber prices remain elevated and rupee depreciation will add to costs in Q2 versus Q1. This represents a sequential cost increase of 8-10%.
- After 11% cumulative price increase in replacement market (7% by June, now ~11% post-July 1 hike), management targets another 4-6% through July-August to recover the raw material cost gap.
- Capacity-related capex prioritized with high utilization across plants. New 53,000 two-wheeler tire capacity approved at ₹25 crore, to be phased by FY31.
- 60% customer transition completed by Q1 end; 90% expected by September. FY28 will be first full year with control of entire value chain; H2 FY27 will see volume growth commencement.
Risks flagged
- Despite aggressive price hikes, there is a lag between cost increases and price realization. Gross margins collapsed to 33.9% in Q1 from normal 40-41%, and management expects continued pressure in Q2 before potential recovery in H2.
- Domestic rubber prices at ₹280/kg, a 15-year high and at a ₹15-20/kg premium to international prices. Q2 rubber prices are 'kind of fixed' due to pipeline inventory; any correction likely only in Q3-Q4 if commodity markets normalize.
- The $80 million loan to Sri Lankan subsidiary created a ₹48 crore finance cost hit in Q1 due to LKR depreciation (312 to 335/dollar). While 30% of debt will convert to equity to reduce exposure, currency fluctuations will continue impacting consolidated earnings until fully addressed.
- Management flagged El Nino risk to rural demand via reduced farm incomes and supply chain disruptions from West Asia crisis. Q2 may see 'some moderation' though demand is not expected to 'fall off a cliff'. Replacement demand for MHCV expected mid single-digit.
Key quotes
- Our normal gross margins are 40-41%. In normal times first quarter saw us going down to 33%. So there is a big gap to be covered.
- Price hikes need to be taken by us... If the raw material prices fall off in second half some time we would intend to hold on to the price till we recover to a normal level of operation.
- We expect the commodity prices to stabilize once the West Asia war comes to an end which may lead to some stability in the commodity prices hopefully in the second half of the year.
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