Quarterly Results ArchiveLast updated 15 October 20263 min read

Ceat Profit Drops 40% Despite 26% Revenue Growth as Costs Bite

Strong sales driven by premium tyres and exports were overshadowed by a sharp margin contraction, with cost pressures expected to persist into the next quarter.

By Anant Kacholia, HexaWealth Research · Created 15 October 2026

Ceat's Q2 FY27 saw a sharp divergence: revenue surged 26% year-on-year to ₹4,762 crore, but net profit fell 40% to ₹112 crore. Elevated raw material costs from the West Asia crisis squeezed margins, a pressure management expects to continue.

For Ceat, the September quarter was a story of strong demand running headlong into stubbornly high costs. The tyre maker delivered impressive revenue growth, but the bottom line tells a different tale as geopolitical tensions kept raw material prices elevated, squeezing profitability.

The numbers show the split clearly. Revenue rose 26% year-on-year to ₹4,762 crore, continuing a multi-quarter growth streak. However, net profit fell 40% to ₹112 crore. The net profit margin contracted by 250 basis points to 2.4%.

Revenue (₹ Cr)

Profit (₹ Cr)

Net Profit Margin (%)

Metric	CurrentQ2 FY27	PreviousQ1 FY27	Same quarter LYQ2 FY26
Period	Quarter ended September 2026	Quarter ended June 2026	Quarter ended September 2025
Revenue (₹ Cr)	4,762.0YoY +26%	4,318.0	3,772.7
Profit (₹ Cr)	112.0YoY -40%	4.0	185.7
Net Profit Margin (%)	2.4YoY -51%	0.1	4.9

Sequentially, profit rebounded sharply from a near-break-even ₹4 crore in Q1, a quarter management had called exceptionally challenging. This QoQ jump, however, comes off an extremely low base.

Why margins are under pressure

The profit squeeze stems directly from input costs. According to reports from CNBC-TV18 and the Economic Times, the continuing conflict in West Asia kept commodity costs high. CEO Arnab Banerjee said the company responded with tighter cost controls, but it wasn't enough to fully offset the inflation.

The company also incurred a one-time cost of ₹13 crore for voluntary retirement schemes, as noted by CNBC-TV18. While this impacted the quarter, the broader margin story is about raw materials.

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· CEATLTD

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ISIN: INE482A01020

Where the growth came from

Demand remained robust. Management cited growth in premium segments across business units as a key driver. A report from AutocarPro indicated that OEM supply contracts and export markets saw double-digit volume and price growth, while domestic replacement growth was more price-led.

The company is investing to meet this demand, with capital expenditure of nearly ₹490 crore in the quarter focused on expanding capacity in high-utilization areas, as per the Economic Times.

The outlook hinges on pricing power

Management expects cost pressures to persist into the December quarter. CFO Kumar Subbiah told CNBC-TV18 that commodity prices remain elevated. The plan is to fight back with more price increases.

CEO Arnab Banerjee said the company will look to deliver double-digit growth again in the second half, “alongside further price hikes.” Reports suggest the company is evaluating price increases of 4-6% this quarter to try and recover margins.

Key Points

Revenue grew 26% year-on-year to ₹4,762 crore, but net profit fell 40% to ₹112 crore.
The net profit margin contracted by 250 basis points to 2.4%, pressured by high raw material costs linked to the West Asia crisis.
Growth was led by premium segments, with strong performance in OEM and export markets.
Management expects cost pressures to continue into Q3 and plans further calibrated price hikes to defend margins.
Capital expenditure of nearly ₹490 crore in the quarter was directed at capacity expansion.

Hexa Perspective

Ceat's quarter underscores a classic margin squeeze. Strong volume and pricing growth in the top line is being swallowed by input cost inflation that the company has yet to fully pass through. The sequential profit recovery is more a bounce from a disastrous prior quarter than a sign of sustained margin improvement.

The investment case now rests on the success of planned price hikes against a backdrop of continued geopolitical uncertainty affecting commodity prices. If Ceat can execute these increases without losing market share, a margin recovery in the latter half of the fiscal year is plausible. If not, the divergence between revenue and profit may persist.

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Frequently asked questions

What were Ceat's Q2 FY27 results?

Ceat reported Q2 FY27 revenue of ₹4,762 crore, a 26% year-on-year increase. However, net profit fell 40% to ₹112 crore. The net profit margin contracted to 2.4% from 4.9% in the same quarter last year, pressured by high raw material costs.

Did Ceat's profit rise or fall in Q2 FY27?

Ceat's profit fell in Q2 FY27. Consolidated net profit declined by 40% year-on-year to ₹112 crore, down from ₹186 crore in Q2 FY26. The drop was due to elevated raw material costs squeezing margins despite strong revenue growth.

What is Ceat's revenue for Q2 FY27?

Ceat's revenue for the second quarter of FY27 was ₹4,762 crore. This marks a 26% increase compared to the ₹3,773 crore reported in the same quarter of the previous fiscal year, driven by growth in premium tyre segments.

Why did Ceat's profit fall despite revenue growth?

Ceat's profit fell due to a severe margin squeeze. According to management commentary reported by CNBC-TV18 and the Economic Times, elevated raw material costs, driven by the West Asia crisis, increased expenses faster than the company could offset with price hikes, compressing profitability.

What caused the margin contraction in Q2 FY27?

Ceat's net profit margin contracted by 250 basis points primarily due to high input costs. Reports from CNBC-TV18 and the Financial Express attribute this to elevated commodity prices amid the West Asia conflict, which outweighed the benefit of revenue growth and cost-control measures.

Were there any one-off costs in Ceat's Q2 results?

Yes, Ceat incurred a one-time exceptional expense of ₹13 crore during Q2 FY27. As reported by CNBC-TV18, this cost was related to voluntary retirement schemes (VRS), which impacted the quarter's profitability alongside the broader raw material cost pressure.

Which segments drove Ceat's revenue growth?

Ceat's revenue growth was led by its premium tyre segments across business units. A report from AutocarPro indicated strong double-digit volume and price growth in OEM supply contracts and export markets, contributing significantly to the 26% overall revenue increase.

What is Ceat's outlook for raw material costs?

Ceat's management expects cost pressures to persist. CFO Kumar Subbiah stated, as reported by CNBC-TV18, that commodity prices are expected to remain elevated into the December quarter (Q3 FY27), prompting the company to plan further price increases.

How much did Ceat spend on capital expenditure in Q2?

Ceat spent close to ₹490 crore on capital expenditure in Q2 FY27, as reported by the Economic Times. This investment was largely directed towards expanding production capacity in areas where plant utilization rates were already high.

What is Ceat's plan to improve margins?

Ceat plans to implement further price hikes to improve margins. CEO Arnab Banerjee said the company will look to deliver double-digit growth alongside more price increases in the second half of FY27, aiming to offset persistent raw material cost inflation.

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