CEAT Ltd Q2FY26 FY25 – “Rubber Meets Drama: ₹3,773 Cr Sales, ₹186 Cr Profit, and a $225M Michelin Meal”
1. At a Glance
Ladies and gentlemen, presenting CEAT Ltd — the RPG Group’s rubber-clad rockstar who just swallowed Michelin’s Camso business like a spicy vada pav and still managed to smile in its Q2FY26 selfies. Sales for the quarter hit ₹3,773 crore (up 14.2% YoY), PAT zoomed 52.5% to ₹186 crore, and the stock now lounges at ₹3,732 — because apparently, rubber is the new gold. Market cap? ₹15,098 crore, EV ₹17,181 crore, and a P/E that stares back at you with 28.8 times patience. With ROCE at 15.4% and ROE at 11.8%, CEAT is basically the student who just scored 75% and still got featured on the notice board because everyone else barely passed.
They’ve just completed the $225 million Camso off-highway acquisition from Michelin (September 2025), launched EV-specific tyres, and keep flexing their “WEF Lighthouse” tag like it’s a Michelin star. But don’t forget — the rubber world isn’t a smooth ride. There’s inflation, raw material roulette, and a global slowdown that makes truckers cry. Still, CEAT seems to have strapped on its seatbelt tight.
2. Introduction – The Rubber Republic
In the vast jungle of Indian auto components, CEAT is the Tarzan swinging confidently from one quarter to another, yelling “Halol!” instead of “Aaaahhhh.” Established way back in 1958 and later adopted by RPG Group in 1982, this tyre titan has seen wars, recessions, oil crises, EV revolutions, and the birth of Shubman Gill — all while rolling out 48 million tyres a year.
The stock has inflated faster than a newly-married man’s ego — up 25.6% YoY, 34.9% in 3 years, and 29.3% in 5 years. Not bad for a company whose product literally touches the ground all day.
The latest quarter reads like a Bollywood plot — ₹3,773 crore revenue, ₹186 crore profit, Camso acquisition completed, capex ₹400 crore in Nagpur, and a $171M Sri Lanka OHT expansion. In other words, CEAT is quietly building a mini tyre empire from Nashik to Nashville.
Question for you: when was the last time you actually looked at your tyre brand before buying it? Yeah, exactly. CEAT’s biggest challenge is not competition — it’s consumer attention span.
3. Business Model – WTF Do They Even Do?
So, what does CEAT do apart from sponsoring IPL timeouts and sticking logos on Rohit Sharma’s bat? In short — they make tyres. But in long — they make tyres for every living, breathing vehicle that has wheels.
Their 9MFY25 revenue mix:
Truck & Bus: 30% (the India ka dhanda segment)
2/3-Wheelers: 28% (the Splendor nation backbone)
Passenger Cars/UVs: 20%
Off-Highway Vehicles: 15% (tractors, loaders, Camso business incoming)
LCV/Others: 7%
And by channel:
Replacement: 54% (cha-ching!)
OEM: 27% (car companies’ emotional damage)
Exports: 19% (110+ countries, Sri Lanka 50% share)
They run 6 big factories across Nashik, Halol, Ambernath, Nagpur, Mumbai, Chennai — plus 3 “smart facilities” where AI probably judges your rolling resistance. CEAT’s goal is simple: make every Indian’s tyre slightly better than the road it drives on.
Commentary: CEAT’s profit grew faster than petrol prices. The operating margin hit 13% — its best in recent quarters — despite a modest rise in raw material costs. EBITDA margin rose on a cocktail of premium tyres, exports, and reduced logistics costs.
5. Valuation Discussion – The “Fair” Value Circus
Let’s calculate the educationally fair range using three yardsticks.
(a) P/E Method Industry average P/E ≈ 30x. CEAT annualised EPS = ₹184. Fair range = 20x to 30x → ₹3,680 – ₹5,520.
(b) EV/EBITDA Method EV = ₹17,181 Cr; FY25 EBITDA ≈ ₹1,620 Cr. EV/EBITDA = 10.6x. If re-rated to 12x (peer average) → Fair EV = ₹19,440 Cr → Fair equity value ≈ ₹17,360 Cr → ~₹4,280 per share.
