CEAT CFO sees margin pressure to continue in Q3; premium passenger tyres in focus

CEAT Ltd expects raw material costs to rise 4-5 per cent sequentially in the third quarter of FY27, with margin pressure likely to persist, Chief Financial Officer Kumar Subbiah said in an interaction with Business Today.

"Q3 is going to be a good quarter, with respect to top line, but margin pressure will continue," Subbiah stated.

The company has raised prices across several product categories to partly offset higher input costs. During the first six months of FY27, CEAT increased prices by around 16-17 per cent, a pace Subbiah described as unprecedented for a six-month period.

The price hikes covered two-wheelers, passenger cars and truck and bus radial tyres. In its international business, price increases for farm and off-the-road (OTR) tyres have been more modest, he said.

Premium passenger tyres

CEAT is seeing a growing contribution from premium tyres to its incremental orders, particularly in the passenger vehicle segment.

Subbiah said nearly half of the company's incremental orders were for tyres with a diameter of more than 17 inches, which CEAT classifies as premium tyres.

The company has a market share of more than 25 per cent in the two-wheeler tyre segment. Its share in truck and bus radial tyres is also gradually increasing following capacity additions that have enabled it to participate more fully in the segment, he said.

EV growth

Subbiah said electric vehicle (EV) adoption in India could accelerate amid a greater focus on clean energy and sustainability.

He also said the West Asia crisis and the resulting pressure on energy prices could potentially support EV penetration. Two-wheeler EV penetration has been increasing consistently, he noted.

Electrification in the commercial vehicle segment, however, remains at an early stage, according to Subbiah. He cited the need for charging infrastructure and the long distances covered by commercial vehicles as factors relevant to adoption.

He also pointed to hydrogen as a possible alternative for commercial vehicles, while noting that the pace of its adoption remains uncertain.