CEAT Managing Director & CEO Arnab Banerjee has indicated that the company expects a challenging second quarter due to rising raw material costs. However, management remains optimistic about the full-year outlook, supported by strong demand across business segments, pricing actions and an expected recovery in profitability during the second half of FY27.

While input cost inflation may pressure margins in the near term, CEAT believes robust demand and higher selling prices should help sustain revenue growth before margins improve later in the financial year.

Parameter	Management View
Raw Material Costs	Expected to rise 8–10% in Q2 versus Q1.
Q2 Margins	Likely to remain broadly similar to Q1.
Pricing	Further price hikes planned.
Demand	Strong across all segments.
FY27 Revenue	Double-digit topline growth remains possible.
Margins	Recovery expected in H2 FY27.

• Natural rubber and other key raw material prices are expected to remain elevated.
• Higher input costs may offset the benefit of recent price hikes.
• Management expects operating margins to remain under pressure during the quarter.
• Demand remains healthy enough to support production volumes.

• Demand continues to be robust across replacement and OEM segments.
• Additional price increases should gradually offset higher costs.
• Double-digit revenue growth remains achievable for FY27.
• Margins are expected to improve during the second half as pricing catches up with raw material inflation.

• Movement in natural rubber and crude-based raw material prices.
• Success of planned price increases.
• Demand trends across passenger, commercial and two-wheeler tyres.
• Export demand and replacement market growth.
• Whether H2 FY27 margin recovery materialises as guided.

Sector Perspective

The tyre industry is highly sensitive to raw material costs, particularly natural rubber, synthetic rubber and crude derivatives. Companies with strong brands, pricing power and healthy replacement demand are generally better positioned to navigate periods of input-cost inflation than those competing primarily on price.

Investor Takeaway

Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that CEAT's management is signalling confidence despite near-term cost pressures. While Q2 may remain challenging due to higher raw material prices, expectations of sustained demand, additional pricing actions and margin recovery in H2 FY27 suggest that management views the pressure as temporary rather than structural. Investors should monitor cost trends and the company's ability to preserve profitability over the coming quarters.

Disclaimer: This article is for educational purposes only and summarizes management commentary. Business outlooks and margin guidance are forward-looking statements that depend on raw material prices, demand conditions and execution. Investors should review official company disclosures before making investment decisions.

Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.

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