Tyre maker Ceat Ltd. expects a stable March quarter with double-digit year-on-year growth, even as rising raw material costs and currency volatility are likely to exert mild pressure on margins, according to Kumar Subbiah, chief financial officer.
CEAT reported a 20% year-on-year increase in standalone revenue in the December quarter, driven largely by volume-led growth. Export growth was aided by a lower base, while OEM volumes improved across two-wheelers and passenger vehicles.
GST Rate Impact
The replacement segment also posted mid-teen growth. A key demand trigger during the quarter was the GST rate cut implemented in September as tyre prices in the replacement market declined by nearly 10% following the tax cut, helping revive demand momentum in the December quarter.
Looking ahead, CEAT expects some moderation in margins in the Q4 as input costs edge up. “We expect raw material prices to be higher by around 1–1.5% in Q4 compared to Q3, mainly due to an upward movement in natural rubber prices and currency volatility,” Subbiah said.
International natural rubber prices have risen from about $1,700 per tonne to nearly $1,800 per tonne, while the rupee has depreciated by 4–5% over recent months, impacting import-linked costs. “Beyond this, we do not expect sharp volatility unless there is a steep currency movement,” he added.
On the demand outlook, the company remains cautiously optimistic. “Two-wheeler tyre demand should continue in Q4 and into Q1, followed by passenger vehicles. Truck and bus tyres typically see growth during the summer months,” Subbiah said.
CEAT has grown around 15.4% on a standalone basis in the first nine months of the fiscal and expects Q4 to remain stable with double-digit growth.
Global Export Performance
Exports rose over 25% year-on-year after a flat performance last year. Europe remains CEAT’s largest market, followed by the Middle East Latin America, Southeast Asia and Brazil. Exposure to the US is limited to under 4% of total exports.
“Any easing of tariff-related issues would have a positive psychological impact, but our direct exposure to the US is minimal,” Subbiah said.
Subbiah said CEAT’s board has approved additional investments at the Chennai plant for passenger vehicle tyres, while the Nagpur facility will scale two-wheeler tyre capacity to one lakh units annually. Expansion in truck and bus tyres is also underway.