CEAT Ltd. anticipates a continued squeeze on profit margins into the third quarter of fiscal year 2027, driven by an expected 4-5 percent sequential increase in raw material costs. Chief Financial Officer Kumar Subbiah conveyed this outlook, stating that while the top line for Q3 is projected to be strong, margin pressure will persist.
To partially offset rising input costs, CEAT implemented significant price hikes across various product categories. In the first half of FY27, prices surged by an unprecedented 16-17 percent, according to Subbiah. These increases covered two-wheelers, passenger cars, and truck and bus radial tyres. International business saw more modest price adjustments for farm and off-the-road (OTR) tyres.
Premium Passenger Tyres: A Growth Driver
A key strategic focus for CEAT is the expanding contribution from premium tyres, particularly within the passenger vehicle segment. Subbiah noted that nearly half of the company's incremental orders are now for tyres with a diameter exceeding 17 inches, which CEAT classifies as premium products.
The company maintains a strong market presence, holding over 25 percent market share in the two-wheeler tyre segment. Its share in truck and bus radial tyres is also experiencing gradual growth, following recent capacity expansions that have enhanced its participation in this sector.
Electric Vehicle Adoption and Future Outlook
Looking ahead, CEAT sees potential for accelerated electric vehicle (EV) adoption in India, fueled by a growing emphasis on clean energy and sustainability. Subbiah suggested that geopolitical events, such as the West Asia crisis and its impact on energy prices, could further support EV penetration, particularly in the two-wheeler segment, which has shown consistent growth.
However, electrification in the commercial vehicle sector remains in its nascent stages. Subbiah highlighted challenges such as the need for robust charging infrastructure and the long distances typically covered by commercial vehicles as critical factors influencing adoption. He also mentioned hydrogen as a potential alternative for commercial transport, though its adoption timeline remains uncertain.