CEAT Q3 Profit Soars 60%, Announces ₹1,314 Cr Expansion

Introduction to CEAT's Strong Quarter

CEAT Limited, a prominent player in the Indian tyre industry, announced a robust financial performance for the third quarter of fiscal year 2026. The company reported a significant 60.3% year-on-year increase in its consolidated net profit, which stood at ₹155.7 crore. This growth was accompanied by a strategic announcement of a ₹1,314 crore investment to expand its manufacturing capacity, signaling confidence in future market demand. The positive results were driven by strong volume growth across its business segments and favourable market conditions, including stable commodity prices and supportive government policies.

Detailed Financial Performance

CEAT's consolidated revenue from operations for the quarter ended December 2025 climbed by 26% to reach ₹4,157 crore, compared to the corresponding period in the previous fiscal year. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) witnessed an even more impressive surge, growing by 65.2% to ₹563.3 crore. This substantial increase in operational profitability led to a notable improvement in EBITDA margins, which expanded by 320 basis points to 13.5% from 10.3% in Q3FY25. The strong top-line growth created significant operating leverage, which, combined with stable input costs, contributed directly to the enhanced profitability.

On a standalone basis, the company's performance was equally strong. Standalone revenue grew by 20% year-on-year to ₹3,957 crore. The standalone EBITDA margin was even higher at 14.08%, with net profit for the standalone entity reaching ₹192 crore. This performance underscores the strength of CEAT's core operations in the domestic market.

Management Commentary on Performance Drivers

Arnab Banerjee, the Managing Director and CEO of CEAT, attributed the strong quarterly performance to several key factors. He highlighted that revenue growth was broad-based, with all segments contributing positively. A significant catalyst for domestic demand was the reduction in GST rates, which boosted consumer sentiment and sales. Banerjee also pointed to emerging opportunities in international markets, expressing optimism that the company's positive momentum would carry into the final quarter of the fiscal year, setting the stage for a strong annual closing.

CFO Kumar Subbiah provided further financial context, emphasizing that the impressive top-line growth was the primary driver for improved operating leverage and margin expansion. He confirmed that stable commodity prices provided a favourable cost environment. Subbiah also noted that the company had recognised a provision of ₹58 crore during the quarter to account for the impact of new labour codes. Despite this provision, the company continued its capital expenditure to support growth, funding it largely through internal accruals.

Strategic Capacity Expansion Plan

In a separate but related development, CEAT's board approved a substantial capital expenditure plan of ₹1,314 crore to expand the capacity of its Chennai plant located in Sriperumbudur. This strategic investment aims to add an additional 35 lakh tyres per annum to its production capabilities, specifically targeting the Passenger Car and Utility Vehicle (PCUV) category. The expansion is scheduled to be completed by the first half of fiscal year 2028.

This move is a clear indication of CEAT's expectation of sustained demand growth in the PCUV segment. The company's current installed capacity stands at approximately 95 lakh tyres per annum, which is operating at a utilisation rate of around 80%. The new investment will be financed through a balanced mix of internal accruals and debt, reflecting a prudent financial strategy to fuel future growth.

Key Financial Metrics Summary

Market Reaction and Outlook

The market responded positively to the company's strong performance and strategic initiatives. Ahead of the results announcement on January 19, 2026, shares of CEAT Limited closed at ₹3,895 on the National Stock Exchange (NSE), marking a gain of 2.68%. The robust earnings report and the forward-looking expansion plan are likely to reinforce investor confidence in the company's growth trajectory.

Looking ahead, CEAT appears well-positioned to capitalize on the growing demand in the Indian automotive market. The focus on the PCUV segment through the Chennai plant expansion aligns with industry trends. With a healthy balance sheet, stable commodity prices, and strong demand drivers, the company is poised to continue its growth momentum and strengthen its market position.

Conclusion

CEAT's third-quarter results for FY26 demonstrate strong operational execution and financial health. A 60% surge in net profit and a 26% rise in revenue, coupled with expanding margins, highlight the company's ability to leverage market opportunities effectively. The announcement of a ₹1,314 crore capacity expansion underscores a clear and ambitious strategy for long-term growth, positioning CEAT to meet the anticipated rise in demand for passenger vehicle tyres and solidify its standing in the competitive Indian tyre market.