CEAT Q2 FY26 Results: PAT up 54%, margin at 13.4%

Key takeaway from the quarter

CEAT reported a stronger set of Q2 FY26 numbers (Jul to Sep 2025), with revenue growth supported by higher volumes and firmer pricing, while profitability improved on operating efficiencies and lower raw material costs. Consolidated revenue came in at ₹3,773 crore, up 14.17% year on year. Profit after tax (PAT) rose 53.72% to ₹186 crore versus ₹121 crore a year earlier, and EPS increased to ₹45.97. EBITDA increased 39%, and margins expanded to 13.4% from 11% last year. Alongside the quarterly outcome, management commentary pointed to currency-related cost pressure ahead, given the rupee’s move towards around 91 to the US dollar.

What CEAT reported in Q2 FY26 (Jul to Sep 2025)

The company said Q2 revenue growth was driven by an 11% increase in sales volumes and a 3% rise in average selling prices. Margin expansion to 13.4% suggested better absorption of operating costs and tighter cost control. CEAT also cited a 5% reduction in raw material costs and improved capacity utilisation at its plants as supporting factors. The quarter’s improvement comes after a softer Q1 FY26 margin profile, when higher expenses and a different product mix were highlighted as key drags. For investors tracking profitability in the tyre sector, the Q2 print matters because it shows a meaningful rebound in earnings despite ongoing volatility in input costs and currency.

Standalone performance signals stronger operating leverage

In addition to consolidated numbers, CEAT disclosed standalone figures that it said were more comparable for the quarter. Standalone revenue for the quarter stood at ₹3,957 crore, translating to growth of about 20.1% year on year and 6.91% quarter on quarter. Standalone net profit was reported at about ₹191.6 crore, and a standalone net margin of 14.1% was referenced in the commentary. The company also noted that operating profit was in double digits, in line with expectations, after absorbing operating costs. On profits, the standalone profit of about ₹191.59 crore compared favourably with ₹95.97 crore in the same period of the previous year, but was marginally lower than ₹202.23 crore reported in Q2.

Currency and input cost: what management flagged

Management commentary linked cost pressures to USD appreciation and suggested that a move in the currency during the quarter could influence costs going forward. It noted that the rupee’s movement to around 91 per US dollar would have an impact on costs. The expected margin impact was indicated to be about 1% to 1.5% in Q4 and beyond. At the same time, the company described the overall cost environment as broadly favourable, while stressing closer monitoring of raw material costs.

Separately, CEAT indicated it expects commodity prices to remain benign, with the possibility of a mild increase in Q4. The combination of a benign commodity outlook and a quantified currency headwind frames the near-term margin debate: how much of the benefit from softer inputs and operating efficiencies can be retained if the rupee remains weak.

Q1 FY26 context: revenue growth but margin pressure

For Q1 FY26, CEAT indicated that consolidated net revenue stood at ₹3,529 crore, while another disclosure described revenue at about ₹3,530 crore, up 10.5% year on year from ₹3,193 crore. It also said it crossed ₹3,500 crore in a quarter for the first time, driven by volume and price growth, with growth predominantly in OEM and replacement segments while international business revenue remained flat.

Profitability in Q1 was described as pressured. One result summary said net profit dropped to ₹112 crore from ₹154 crore a year ago due to higher raw material prices and increased advertising expenditures, particularly linked to IPL branding. Another disclosure referenced standalone net profit of ₹135 crore for Q1 and a standalone EBITDA margin of 11.1%. EBITDA in Q1 was cited at ₹390 crore with a margin of 10.99%, down from 11.99% last year.

Capex, capacity additions, and Camso integration

On strategy and execution, CEAT said the integration of Camso, its off-highway tyre subsidiary, is progressing, with capacity expansion and customer transition expected to complete in the next few quarters. The company also pointed to supportive domestic demand conditions, including GST rate cuts on tyres and vehicles.

On capacity, CEAT’s board approved a ₹450 crore investment to expand its Chennai plant capacity by 35% by FY27. In addition, CEAT has earmarked ₹900 to ₹1,000 crore in capital expenditure for FY26, primarily for expanding passenger car tyre and truck and bus radial tyre capacities. This follows capex of ₹946 crore in the prior year, as cited in the provided disclosures.

Snapshot table: key figures mentioned

Market impact and what to track next

The Q2 margin improvement to 13.4% and sharp PAT growth indicate that CEAT benefited meaningfully from operating efficiency and cost control, alongside softer raw material costs cited at a 5% reduction. At the same time, the margin sensitivity to currency remains a key near-term variable because the company expects a 1% to 1.5% margin impact in Q4 and beyond due to rupee weakness.

For the industry, the disclosures underline a familiar pattern in tyres: profitability can swing quickly with raw material and currency moves, and pricing pass-through is often staggered across segments. CEAT’s stated focus on premiumisation and strengthening exports is positioned as a way to reduce dependence on price-sensitive segments, but Q1 commentary also showed that marketing costs and product mix can still influence margins quarter to quarter.

Conclusion

CEAT’s Q2 FY26 results showed stronger revenue momentum and a clear step-up in profitability, with consolidated EBITDA margins rising to 13.4% and PAT increasing to ₹186 crore. Standalone revenue of ₹3,957 crore and net profit of about ₹191.6 crore further reinforced the quarter’s operating leverage. The next set of triggers, based on management commentary, will be the extent of currency-driven cost pressure and whether commodity prices remain broadly benign into Q4.