Tyre major CEAT Ltd is entering FY27 with a cautiously optimistic outlook, as steady demand trends across key segments are tempered by rising raw material costs and geopolitical uncertainties, according to Managing Director & CEO Arnab Banerjee.
Banerjee indicated at the latest earnings call that while seasonal tailwinds and a healthy rabi harvest are expected to support rural demand, the broader environment remains clouded by the West Asia conflict and fuel price volatility. “Demand looks good in both aftermarket and OEM segments, but rising input costs will remain a key challenge,” he noted.
Replacement, OEM segments to drive near-term growth
The company expects replacement demand in medium and heavy commercial vehicles (MHCV) to grow in high single digits, supported by economic activity and fleet aging. Two-wheeler demand remains robust, surpassing pre-COVID levels, while passenger tyre replacement demand has been relatively muted but is expected to improve over time.
On the OEM front, MHCV and light commercial vehicles continue to show strong momentum, aided by GST rationalisation. Passenger vehicle growth is likely to remain in healthy single digits, with SUVs and MPVs outperforming sedans.
International business shows recovery signs
CEAT is witnessing early signs of recovery in international markets, particularly in commercial vehicles across the US and Europe, and in passenger tyres in Europe. However, geopolitical tensions have impacted sales to the West Asia in Q4, and remain a key risk.
Q4 growth momentum remains strong
The company reported an 18.2% value growth in Q4, with both replacement and OEM segments expanding in mid-teens. Replacement demand was led by strong growth in two-wheelers (mid-20s), while truck, bus, and farm segments recorded low-teen growth.
OEM performance was equally robust, with strong double-digit growth in passenger vehicles, continued resilience in farm equipment, and steady gains in two-wheelers. International business rebounded sharply across segments, particularly in Western Europe and the US.
Electrification, premiumisation in focus
CEAT continues to deepen its presence in the electric vehicle segment, holding around 29% share in passenger EV tyres and 18% in two-wheelers. The company is participating in most new EV launches in the domestic market.
Premiumisation remains a key strategic lever, with increased traction in 17-inch-plus passenger vehicle tyres and higher-capacity two-wheeler segments (250cc+). The company has also introduced premium truck and bus radial products aimed at reducing total cost of ownership.
Capex calibrated amid uncertainty
With capacity utilisation at 85–90%, CEAT plans to maintain a calibrated capital expenditure approach. It expects to invest ₹200–250 crore in the near term for essential capex, while full-year capex is estimated at ₹1,300–1,400 crore, subject to quarterly demand trends.