CEAT Q2 FY27 Results (NSE: CEATLTD)
Signal: Steady quarter
The read
The key inflection is a sharp margin reset after two quarters of YoY margin expansion: standalone revenue grew 22.9% to ₹4,548 crore, but gross margin contracted 738bps to 33.58% as raw-material cost rose to 69.4% of revenue, driving operating margin down 355bps to 10.14% and PAT down 18.8% to ₹164 crore.
P&L walk
The supplied filing text confirms consolidated results were approved and reviewed, but does not include the consolidated statement figures; subsidiary and joint-venture disclosures indicate ₹228 crore of subsidiary revenue and ₹5 crore of subsidiary net loss for the quarter.
Key positives
- Standalone revenue grew 22.9% YoY to ₹4,548 crore and 9.3% QoQ, extending the top-line acceleration from the prior year.
- Employee and other operating expenses grew 5.5% YoY to ₹1,066 crore, materially slower than revenue growth of 22.9%.
- PPE and CWIP increased to ₹7,035 crore and ₹926 crore respectively, indicating continued capacity and asset-base expansion.
- Operating margin recovered 101bps QoQ to 10.14%, although it remained 355bps below the year-ago level.
Key concerns
- Gross margin compressed 738bps YoY to 33.58% as raw-material cost rose to 69.4% of revenue from 61.7%, with no explicit driver disclosed.
- PAT declined 18.8% YoY to ₹164 crore despite 22.9% revenue growth, showing that growth did not convert into earnings because of input-cost pressure.
- Net debt rose to ₹3,466 crore from ₹2,958 crore at 31 March 2026, while H1 operating cash flow fell to ₹613 crore from ₹935 crore.
- Inventory increased to ₹2,245 crore from ₹1,660 crore at 31 March 2026, and H1 cash flow included a ₹585 crore inventory outflow.
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