The tyre sector has witnessed a typical case of rising revenue without profit growth. CEAT Limited, India’s leading tyre manufacturer, released its Q2 FY27 financial results. Market demand lifted top-line performance, yet surging raw material costs and supply chain disruptions significantly eroded corporate profits.
Financial data shows CEAT posted consolidated revenue of INR 47.62 billion in Q2, a 26% year-on-year increase. Consolidated net profit fell to INR 1.12 billion, declining 39.8% YoY. The EBITDA margin contracted to 9.5% from 13.53% in the same period last year, reflecting a notable compression in profit margins.
The revenue expansion was mainly driven by strong sales of premium tyre lines across its business divisions. Escalating prices of rubber and other raw materials, coupled with supply chain volatility triggered by Middle East geopolitical conflicts, pushed up procurement costs and became the core cause of weaker profits.
To tackle cost headwinds, CEAT tightened internal cost controls while ramping up capacity investment. During the quarter, the firm invested nearly INR 4.9 billion to expand existing production lines with high capacity utilisation rates.
According to the company’s CFO, commodity cost pressures are expected to persist into Q3. CEAT plans to roll out calibrated pricing adjustments and continuously refine its product mix to improve gross margins. Management targets to restore double-digit revenue growth in the second half of the fiscal year.
CEAT’s quarterly results mirror the broader landscape of global tyre manufacturing. Improving downstream demand and premium product sales boost turnover, but volatile rubber and commodity prices together with geopolitical disruptions keep squeezing manufacturing margins. Pricing adjustments and product portfolio upgrading have become primary measures for tyre producers to offset raw material cost inflation.
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