21-07-2025
- Automotive
- Business Upturn
Why are CEAT shares down over 6% today? Know More
By Aditya Bhagchandani Published on July 21, 2025, 09:40 IST
Shares of CEAT Ltd. fell more than 6% on Monday, trading at ₹3,575, down from the previous close of ₹3,827.30, after the company reported a 28% decline in net profit for the first quarter of FY26, despite solid revenue growth.
The tyre manufacturer posted a net profit of ₹112 crore for the June quarter, compared to ₹154 crore in the same period last year. The sharp drop in profit came as margins declined due to higher marketing spends, even as revenue grew.
Revenue for Q1 FY26 rose 10.5% year-on-year to ₹3,529 crore, supported by strong demand in the OEM and replacement segments. EBITDA grew marginally by 1.3% to ₹387 crore, while EBITDA margin slipped to 11% from 12% in Q1 FY25.
Domestic demand remained healthy with robust growth in key segments, though international business was flat amid global macroeconomic challenges. Expansion and outlook
CEAT also announced a ₹450 crore capex plan to expand its Chennai plant's capacity by about 35%, particularly in the Passenger Car Utility Vehicle (PCUV) segment. The project is expected to be completed by the end of FY27.
Managing Director & CEO Arnab Banerjee commented, 'We continue to grow at a strong pace driven by OEM and replacement segments. Looking ahead, we are well-positioned to benefit from premiumisation and electrification trends.'
Banerjee has been reappointed for an additional two-year term starting April 2026, subject to shareholder approval. CFO Kumar Subbiah noted that despite the marketing-heavy quarter, cash flow management helped reduce gross debt by ₹100 crore during the period.
The stock's sharp decline today reflects investor concerns over falling profitability and margin pressures, even as the company charts its growth plans.
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Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
