Indian tyre maker posts robust margins and doubles down on electric vehicle segment as it digests the Sri Lankan acquisition

Sharad Matade

CEAT delivered a strong second-quarter performance, with revenues rising 12.2 percent year-on-year, even as the company navigates turbulent US tariff waters and integrates its recently acquired Sri Lankan off-highway tyre business.

The Mumbai-based tyre manufacturer reported standalone earnings before interest, tax, depreciation and amortisation (EBITDA) of INR 5.07 billion for the quarter ended September, with margins expanding to 13.7 percent. Net profit was INR 2.02 billion, a significant improvement from last year’s INR 1.22 billion.

“We’ve had a good quarter,” Managing Director Arnab Banerjee told analysts on an earnings call, noting that gross margins had climbed back into the company’s long-term target range of 40-42 percent after benefiting from softer raw material prices.

CAMSO Bet Takes Shape

The quarter’s headline event was CEAT’s completion of the CAMSO acquisition from Michelin on 1 September, a deal that positions the Indian manufacturer as a leading player in premium off-highway tyres. The company spent INR 12.32 billion in total for the transaction: INR 2.72 billion in equity, INR 7.02 billion in debt, and INR 2.38 billion for intangibles like trademarks and patents.

Chief Financial Officer Kumar Subbiah said the acquisition pushed consolidated debt to INR 29.44 billion by quarter-end, though debt-to-EBITDA remains comfortable at 1.8 times and debt-equity at 0.64 times. “We have enough leverage to provide necessary growth capital going forward,” he assured investors.

The company has historically maintained conservative financial thresholds, preferring not to exceed debt-to-EBITDA of 3 times or debt-equity of 1 time at peak levels. Although it has never exceeded INR 21 billion in absolute debt before, management is confident in the current INR 30 billion debt level, given the growth opportunities ahead.

The Sri Lankan plant currently operates at 50 percent capacity utilisation, offering significant upside potential. However, CEAT will not gain full control of the value chain for another five to six quarters, as it continues purchasing semi-finished goods from Michelin while setting up upstream mixing and calendaring equipment.

“There have been no surprises based on one month of operation,” Banerjee said, adding that the business is progressing well and remains on track to be margin-accretive in the medium term.

Aggressive Investment Programme

CEAT is in the midst of a substantial capacity expansion across multiple facilities. The company spent INR 1.85 billion on capital expenditure during the quarter, bringing the first-half total to INR 4.15 billion. Management expects full-year capex of around INR 10 billion, excluding CAMSO acquisition costs.

The investment breakdown reveals strategic priorities: INR 1 billion was allocated to research and development, information technology, plant maintenance and moulds. Another INR 0.50 billion is being used to expand truck-bus radial tyre capacity towards 2,000 units, an ongoing multi-year project.

The Ambernath plant expansion absorbed INR 0.70 billion, while the Chennai factory received the largest share at INR 1.60 billion for passenger car downstream operations and motorcycle scooter production. Debottlenecking initiatives across facilities accounted for INR 0.40 billion.

“Expansion projects are progressing as per plan,” Banerjee said, adding that overall capacity utilisation stands at 80-85 per cent currently.

Additional investments are planned for Sri Lanka to install upstream equipment at the CAMSO facility, enabling the company to stop purchasing semi-finished goods from Michelin and control the entire manufacturing process.

Tariff Turbulence

The company faces mounting pressure in the US market, where 50 percent tariffs on off-highway tyres have nearly halted exports. CEAT’s sales of off-highway tyres to America slowed to “practically zero” by quarter-end, though passenger car and truck-bus radial exports continued.

For passenger and truck-bus radials, the 25 per cent tariff applies uniformly across countries, leaving India at no disadvantage. CEAT is partially absorbing the impact while gradually passing costs to customers over the next two to four quarters.

The CAMSO operation in Sri Lanka faces a 20 per cent duty on US exports, with roughly half of that tariff currently being absorbed. “We expect CAMSO also to pass on the full impact of tariffs in maybe two to three quarters,” Banerjee said.

Despite the low base, CEAT’s management remains sanguine. “Our stake in the US market is still very low, so the overall impact on our growth and profitability was not very material,” Banerjee noted.

Domestic Boost from GST Cut

A positive development came late in the quarter when the Indian government cut goods and services tax (GST) on tyres from 28 to 18 percent, and on farm tyres from 18 to 5 percent, effective 22 September. The move is expected to boost demand in semi-urban and rural markets.

“There is significant benefit to customers,” Banerjee said. “The 10 percent duty cut works out to around 7-8 per cent on the selling price. For a truck tyre, it could be INR 1,500 per tyre, which is significant.”

CEAT passed the entire benefit to its channel partners and advised them to do likewise for end customers. The company isn’t contemplating any price increases, given softening raw material costs.

The GST announcement created a temporary dip in September, as buyers deferred purchases and trade down-stocked in anticipation. The replacement market, which had been growing at nearly double-digit rates, contracted during the month. However, momentum is expected to return strongly.

Segment Performance

Original equipment manufacturer (OEM) sales were the star performer, surging in the mid-20s as CEAT secured fitments on cars with larger rim sizes. International business grew in the high teens, while replacement business managed mid-single-digit growth despite September’s dip.

Two-wheeler tyres saw robust demand driven by rural markets, while the passenger car segment grew in mid-single digits. Farm tyre growth in the OEM segment reached the mid-teens.

International markets delivered particularly strong results, with mid-teens growth across key clusters in Europe, Africa and the Middle East. Europe, CEAT’s most profitable export market, saw strong traction in passenger car tyres. Brazil recorded good growth in two-wheeler tyres. Passenger and truck-bus radials now account for 65 per cent of exports, with CEAT claiming to be India’s leading passenger car tyre exporter.

Electric Vehicle Push

CEAT has established strong positions in India’s growing electric vehicle segment, holding a 30 percent share in the OEM passenger car and utility vehicle EV market and a 20 per cent share in the two-wheeler EV market.

“We continue to focus on product development for emerging vehicle sizes, and we have good respect and credibility amongst OEMs to get fitted on upcoming new models,” Banerjee said.

The company launched two innovations during the quarter: SecuraDrive CIRCL, a concept tyre made from 90 per cent sustainable bio-based materials, and RockRad, a premium mining tyre showing early promise.

On the digital front, CEAT became one of the first companies to deploy an agentic chatbot on its website, currently in beta, to personalise customer journeys. The company’s website traffic exceeded 1 million, with organic traffic up 19 per cent year-on-year. Leads for premium SUV users exceeded 30 per cent, while positive brand sentiment jumped 28 per cent in average interaction per post year-on-year.

Raw Material Relief

Raw material costs provided relief, declining 5 per cent quarter-on-quarter. International natural rubber prices held steady at USD 1,700-1,750 per tonne, while domestic prices softened towards import parity by quarter-end, dropping just over INR 10 per kilogram.

Crude oil hovered around USD 65 per barrel, at the lower end of its recent range, amid weak Chinese demand and ample supply.

“Taking into consideration current base prices and the impact of rupee depreciation in the last eight weeks, we expect raw material prices to remain at current levels in Q3,” Subbiah said.

Outlook

Looking ahead, management expects to maintain double-digit growth momentum while keeping margins steady. The third quarter typically sees revenue flatten or dip slightly due to the festival season and the onset of winter, which affects northern and eastern markets.

Replacement demand for medium- and heavy-duty commercial vehicle tyres should track GDP growth at mid-single digits, while two-wheelers should be around 7-8 per cent. At the same time, passenger cars remain soft, in the zero-to-low single digits.

“The GST change will be a positive factor for industry, especially in small towns and rural markets,” Banerjee said. “We also think we’ll arrive at some clarity on the US tariff situation sometime during Q3 or Q4.”

Giti Tire has secured the EcoVadis Platinum Medal for the second consecutive year, positioning it within the top one percent of companies globally evaluated for sustainability. This ongoing distinction underscores the organisation's dedication to ethical operations, environmental stewardship and the generation of sustainable value throughout its worldwide activities.

The EcoVadis framework appraisals in four principal domains: environmental impact, labour and human rights, ethical conduct and sustainable procurement. This methodology offers a thorough benchmark for corporate sustainability. Earning Platinum recognition for two straight years indicates that Giti's environmental, social and governance efforts are not only effective but are also demonstrating ongoing enhancement.

Complementing this accolade, Giti’s manufacturing sites in Anhui and Fujian, China, recently secured ISCC+ certification. This dual achievement illustrates the company's holistic sustainability strategy. This approach encompasses corporate governance and operational excellence while also ensuring the responsible procurement of materials essential for developing next-generation tyres.

As the worldwide mobility industry moves towards more environmentally friendly solutions, Giti is persistently investing in advancements aimed at minimising ecological impact, all without compromising the safety, durability and performance expected by consumers. These milestones reinforce Giti's goal to emerge as a prominent contributor to sustainable mobility within the international tyre sector, offering conscientious products and methods that support its customers, collaborators and communities.

Francois Petiot, Director, International QA Centre, said, “Reaching the top is difficult – but staying at the top of the mountain is even harder. This achievement shows not only our commitment to sustainability, responsible business practices and continuous improvement but also the dedication and teamwork of everyone involved.”

Agricultural machinery specialist Emyr Evans marked four decades in business by restoring the first new tractor it ever sold. The Massey Ferguson 3065, originally purchased in late December 1995 for New Year delivery, has been beautifully brought back to life. It now rides on the latest MICHELIN AgriBib 2 tyres, supplied and fitted by Saracens, a trusted partner and part of the Michelin Quality Centre network. The tyres fitted are 340/85 R24 on the front and 420/85 R34 on the rear.

Emyr Evans founded the company with his wife Gwenda in 1986, starting with used tractors before becoming a Massey Ferguson dealer for Anglesey and Gwynedd in 1996 from their base in Gaerwen. By 2002, their territory had expanded to cover all of North Wales to the Cheshire border, prompting the opening of a second depot in Denbigh. Over the years, the business has grown by adding major franchises including JCB, Fendt, McHale, Pottinger and Bailey. Today, their sons Gwynedd and Berwyn manage the two depots.

The restored tractor is a significant piece of the company’s history, representing the last of Massey Ferguson’s 3000 series of versatile mid-range tractors. It was originally sold to a farmer in Anglesey and had worked there ever since. Despite its coastal location near the Irish Sea, it remained in working order but required dedicated care and attention.

The choice of modern Michelin tyres highlights the evolution in agricultural technology. The current AgriBib 2, with its improved tread pattern featuring 45-degree lugs, offers enhanced traction, durability and a higher load index to cope with the increasing weight of modern machinery. Comparing it to the Bib’X M18 from the 1990s illustrates this progress. For example, a 16.9 R34 Bib’X M18 carried a maximum load of 2,060 kg at 40 kmph, while the equivalent AgriBib 2 now carries 3,075 kg, an increase of over a tonne per tyre.

The restored Massey Ferguson 3065 is being showcased along with a collection of vintage tractors at the company’s 40th Anniversary Open Days (11 and 12 March) at their Denbigh depot on the Colomendy Industrial Estate.

Berwyn Evans, Director at the business, said, “The tractor was sold to a farmer in Anglesey and has been working there ever since. Due to the location by the Irish Sea, it needed some TLC but was still in working order. As the tractor is now 30 years old, it’s been a challenge tracking down replacement parts but a worthwhile one. When it came to fitting new tyres to this special tractor, the only choice was Michelin, which is king in the agricultural world.”

Bridgestone Central Europe has announced leadership changes effective 1 March 2026, with Francesco Landolfo stepping into the role of Business Unit Director Commercial CER. He will oversee operations across Germany, Austria, Switzerland, Denmark, Finland, Norway and Sweden.

Landolfo takes over from Christoph Frost, who guided the commercial division for eight years and was instrumental in embedding the company’s premium approach throughout the region. Frost transitions to a new capacity as Director of Retread Business for Bridgestone EMEA, where he will manage the Bandag retreading enterprise across Europe.

Christoph Frost, Director Retread Business Bridgestone EMEA.

Waqqas Ahmad, Vice President Commercial Europe, highlighted that these moves are vital for advancing the premium strategy in Central Europe and within the retread sector. He noted that both individuals possess the necessary expertise and forward-thinking mindset to deepen client connections and reinforce the brand’s upmarket standing

Omni United has announced the appointment of Dr Mika Lahtinen as Associate Vice-President for Raw Materials and Compounding. The appointment is intended to internalise expert-led design and performance for the rubber compounds used in the company’s flagship brand, Radar Tires.

Dr Lahtinen joins the Singapore-headquartered firm with over 20 years of experience in tyre material innovation. He previously led material development at Nokian Tyres and managed global technology for tyre oils at Nynas, operating across Finland, Sweden and Singapore.

He holds a PhD in Polymer Materials Technology, and at Omni United, he will be involved in the development of materials and compounds, as well as collaboration with global suppliers to advance the company's tyre technology.

The move is designed to provide the manufacturer with direct control over the chemical engineering of its products. Omni United, founded in 2003, markets a range of consumer and commercial tyres under brands including Radar Tires, Patriot Tires and RoadLux.

Omni United sells products in more than 50 countries. Its primary brand, Radar Tires, has been manufactured as a carbon-neutral product since 2013. The integration of in-house compounding expertise is expected to support the company's commitment to innovation and logistics solutions within the global automotive sector.

In an statement the company stated, ‘Bringing Mika’s expertise in-house is a strong addition to our team. It allows us to take a more direct, expert-led approach to the design and performance of Radar Tires’ rubber compounds. With over 20 years in tyre material innovation, Mika has an extensive background in developing breakthrough materials, developing cutting-edge compounds, and collaborating with global suppliers to advance tyre technology.’