CEAT Ltd Q2 FY26 Earnings Analysis

- CEAT expects double-digit revenue growth for FY '26. - Replacement segment volume growth is expected to continue, with higher growth in 2-wheeler and commercial vehicle segments. - Passenger car replacement market growth is expected to remain muted but with some market share gains. - OEM growth will taper slightly but be supported by approvals for larger-size tyres, improving volume mix in future quarters. - International business, after a flat Q1, is expected to rebound in Q2 and subsequent quarters with visibility on order book. - Premium segment in 4-wheelers, currently 10-11% of the market, is projected to grow to 25-30% in 3-4 years, presenting growth opportunities. - Continued focus on premium products like RFT, 21-inch tyres, and advanced innovations will support market share gains. - Growth in exports will pick up post Q1, with positive demand expected in Europe and other regions.

- Double-digit revenue growth is expected for FY '26, driven by OEM and replacement segments. - International business, currently flat, is expected to improve from Q2 onwards with positive visibility in order book for Q2. - Replacement market growth is anticipated to continue strong in 2-wheelers and commercial vehicles; passenger segment growth is expected to be muted but with potential share gains. - OEM growth may taper slightly but supported by higher-size tyre approvals, improving product mix and volumes. - Margins are expected to improve from Q2 due to raw material cost pass-through and improved sales realization, especially in international markets. - EBITDA margin contraction in Q1 attributed to mix and raw material price increase; margin improvement expected as raw material prices soften by 1-2% in Q2. - Profit after tax for Q1 stood at INR112.3 crores; future profits likely to benefit from stabilized raw materials costs and operational efficiencies.

- CEAT approved a capex plan of about INR 450 crores for the Chennai factory focused on passenger car radial (PCR) tyres. This will be spent over the next 18 to 24 months to adjust upstream capacities due to changes in tyre weights. - Total capex guidance for FY '26 is around INR 1,000 crores, which includes maintenance capex for CEAT and Camso. - Maintenance capex for CEAT is estimated between INR 200-250 crores, including R&D, IT, molds, and cost improvement projects. - Camso’s maintenance capex is expected at INR 50-100 crores for about six months of operation in FY '26, with an additional INR 150-200 crores planned for creating upstream manufacturing capacity in Sri Lanka over the next 2 years. - CEAT is investing in premium and innovative products (e.g., RFT, 21-inch tyres) and digital marketing initiatives to drive future growth.

- CEAT Limited has secured necessary funding for the acquisition of Camso, expected to close around Q2/Q3 FY '26. - The company’s consolidated debt was about INR1,814 crores as of June 30, 2025, with a healthy debt-to-EBITDA ratio of 1.2x and debt-equity ratio of 0.4x. - Additional limits for NCDs and CPs have been secured with AA+ long-term and A1+ short-term credit ratings. - No explicit mention of fresh equity fundraising in the transcript. - Capex of about INR1,000 crores is planned for FY '26, including both CEAT and Camso, expected to be funded through internal accruals and existing debt. - Debt expected to rise to INR3,500-3,600 crores assuming INR1,000 crores capex and dividend outflows but actual numbers may vary. - Incremental borrowings expected at below 8% interest rate; current borrowings include some at ~8.25% linked to MCLR.

- CEAT has complete visibility of the order book for Q2 FY '26. - Pickup in international business orders is expected in Q2, following a flat Q1. - The orderbook outlook for Q3 and Q4 FY '26 remains uncertain and will depend on prevailing conditions. - The company anticipates positive order growth for the remaining quarters of the year.