At a Glance

In the last five years (FY21–FY25), CEAT Ltd. transformed from a margin-squeezed passenger-vehicle tyre maker into a resilient all-terrain performer. Revenue climbed from ₹7,610 Cr in FY21 to ₹13,218 Cr in FY25, while net profit swung from a modest ₹432 Cr (FY21) to a healthy ₹471 Cr (FY25). Operating margins recovered from single digits (8% in FY22) back to 11% in FY25—proving CEAT can fix a flat and keep rolling.

1) About CEAT Ltd.

• Incorporated: 1958 (as CEAT Tyres of India, collaboration with Tatas)
• Parent Group: RPG Group (acquired CEAT in 1982)
• Headquarters: Mumbai, India
• Core Products:
  • Passenger Vehicle Tyres (PV)
  • Two-Wheeler Tyres (2W)
  • Commercial Vehicle Tyres (CV)
  • Off-Highway Tyres (OHT)
• Global Footprint: Manufacturing plants in India, Sri Lanka, and partnership tie-ups in emerging markets
• Distribution: Pan-India network of CEAT Wheels Shops, CEAT Speciality Tyres outlets, and exports to 140+ countries

CEAT is best known for being the first tyre company to set up in Mumbai and for launching products like CEAT Milaze, Racing Tyres, and Radial Silk in the Indian market.

2) Key Managerial Personnel (FY25)

Despite FY25’s net profit dipping compared to FY24, CEAT’s leadership kept investment in R&D and brand-building high—proof that strong management remains committed to long-term growth.

3) Financials (FY21–FY25)

3.1 Revenue & Profit Trends

1. Revenue Growth
   • CEAT’s revenue jumped 74% over five years, from ₹7,610 Cr (FY21) to ₹13,218 Cr (FY25).
   • FY22 & FY23 saw double-digit growth (~20% YoY) as pent-up demand returned post–COVID lockdowns.
   • FY24–FY25 growth moderated (5–11%), reflecting supply-chain headwinds and moderating PV demand.
2. Profit Volatility
   • FY22: PAT collapsed to ₹71 Cr (0.8% margin) due to raw-material inflation (rubber, oil) and channel destocking.
   • FY24: Profit soared to ₹635 Cr (5.3% margin) as crude prices cooled, input efficiencies kicked in, and volumes regained.
   • FY25: PAT normalized to ₹471 Cr (3.6% margin) after one-time gains in FY24; underlying profitability remains healthy.
3. Margins Snapshot
   • EBITDA Margin: Bottomed at 7.7% (FY22), peaked at 13.8% (FY24), then settled at 11.2% (FY25).
   • PAT Margin: Low of 0.8% (FY22) → 5.3% (FY24) → 3.6% (FY25).

3.2 Segmental Performance (Latest Quarterly, Q4 FY25)

Note: CEAT does not publicly break exact quarterly segment profits, but management commentary highlights OHT and Specialty tyres driving growth in Q4 FY25.

4) Balance Sheet & Cash Flow Highlights (FY25)

• Working Capital Efficiency:
  • Debtor days ticked up to 46 days, inventory days at 63, payables at 122.
  • Net cash conversion cycle improved to –13 days, aided by extended supplier credit.
• Capex Push & Cash Flow:
  • CEAT invested heavily in capacity expansion (CWIP ₹507 Cr, new state-of-the-art plant in Karnataka).
  • While investing ₹922 Cr (FY25), still generated ₹1,092 Cr from operations—evidence of robust profitability.

5) Forward-Looking Fair Value (FY27E)

• Assumptions:
  • FY27E Revenue: ₹16,000–₹17,000 Cr (8–10% CAGR from FY25)
  • FY27E EBITDA Margin: 12–13% (bike & OHT segments to grow faster)
  • FY27E PAT: ₹650–₹700 Cr
  • FY27E EPS: ₹160–₹170
  • Target PE: 22×–24×

Fair Value Range: ₹3,520 – ₹4,080

With CMP at ₹3,799 (June 06, 2025), the market is roughly pricing in a return to mid-single-digit margins (11–12%) by FY27.

6) Industry & Competitive Outlook

6.1 Tyre Industry Context

• Raw Material Cyclicality:
  • Natural rubber, crude oil derivatives, and synthetic rubber prices remain volatile.
  • CEAT’s backward integration (small-scale rubber plantations) insulates partially, but imported crude fluctuations still bite.
• Regulatory & Technological Shifts:
  • BS VI transition stabilized EV-related tyre specs—CEAT launched EV-ready tyres in FY24.
  • Stringent emission norms & emission testing drive demand for low-rolling-resistance tyres.
• Global Trade Dynamics:
  • Anti-dumping duties on Chinese tyre imports provide competitive advantage to Indian players in the mid‐segment.

6.2 CEAT vs. Peers (FY25 Metrics)

• CEAT’s Middle-Path:
  • EBITDA margin (~11%) trails MRF (~14%) and Balkrishna (~23%), but CEAT offers ~10–15% ROCE—better than Apollo’s ~11%.
  • Higher P/E (31×) signals market optimism on margin expansion; valuations are rich compared to JK Tyre but cheaper than Goodyear.

7) EduInvesting Take

CEAT’s story in the last five years is like “The Great Indian Tyre Drama” directed by Rabbi Shergill on loop:

1. FY22: Input Tsunami
   • Tyre majors screamed as crude soared to $120/barrel. CEAT’s margins collapsed to 7.7%—profit nearly vanished. (FY22: PAT only ₹71 Cr).
2. FY23–FY24: Comeback Kids
   • Raw-material prices eased, volumes rebounded, and CEAT leaned into value-added 2W, OHT segments. EBITDA margins soared to ~13.8%, taking PAT to ₹635 Cr (FY24).
3. FY25: Reality Check
   • Exceptionally strong FY24 rebound set the bar high; FY25 PAT moderated to ₹471 Cr. But CEAT proved it can hold ~11–12% EBITDA, even when peers flirt with 8–9%.
4. OHT & Rural Demand
   • While urban PV demand slowed, CEAT’s farming network (Farm Zones, Farm Points) and OHT (mining, construction) kept cash registers ringing.
5. Digital & EV Pivot
   • CEAT launched EV-ready tyres and digital tyre-monitoring solutions. This is a slow burn—EV tyre replacement market in India is still <5% of total.

“CEAT is the Michelin of the masses—not the fanciest, but still Michelin in its slice of the pie.”

Why CEAT Can Stay in Top Gear

• Broad Product Mix: From hatchback tyres to mining giants—CEAT sells to tricycles and 60-ton dumper rigs.
• Aftermarket Mojo: CEAT Wheels Shop network covers 1,200+ outlets—provides recurring revenue and premium branding.
• Nimble Management: When other tyre players cried “input shock,” CEAT quietly renegotiated supply contracts, tightened their wrench, and rode out the storm.

8) Risks & Red Flags

CEAT’s obvious comfort is its diversified revenue streams. But if OHT slows (mining capex falls) or rural demand dips, CEAT will feel the pinch.

9) Dividend History (FY21–FY25)

CEAT resumed a healthy ₹26/sh dividend in FY25 after channel destocking in FY22. Dividend yield (~0.79%) is modest, but stable for a cyclical tyre stock.

10) Verdict & Next Pit Stop

Is CEAT a multibagger?

• If CEAT can sustainably hold 12–13% EBITDA margins and grow revenue in OHT/2W segments, upside to ₹4,200+ exists (25× FY27E EPS).
• But if raw-materials spike again (₹90–₹100/liter crude), expect margins to shrink back to 8–9%; share price descends to ₹2,800–₹3,000.

Thumbs Up:

• Diversified segments (PV, CV, 2W, OHT) cushion downturns
• Strong recovery from FY22 crisis shows management bandwidth
• Export tailwinds & favorable anti-dumping policies protect margins

Thumbs Down:

• High P/E (31×) demands perfection—any slip in volumes or margins will erode valuations fast
• Working capital is rising—if CEAT cannot collect faster or manage inventory, free cash flow will shrink

CEAT 5-Year Scorecard:

• Revenue Growth: ★★★★☆
• EBITDA Stability: ★★★☆☆
• Balance Sheet Strength: ★★★★☆
• Dividend Stability: ★★★☆☆
• Valuation Comfort: ★★☆☆☆

The Bottom Line: CEAT has proven it can turn a tyre company into a lean, mean, segment-busting machine. But the market has already priced in growth—so any stumble in input costs or rural demand can lead to heavy skidding.

Tags: CEAT, Tyre Industry, 5-Year Recap, FY25 Results, Tyre Margins, Raw Material Volatility, RPG Group, OHT Segment, CEAT EV Tyres, Tyre Stocks India

Author: Prashant Marathe
Date: 7 June 2025
Meta Description: CEAT 5-Year Recap: Revenue up 74%, margins recover from 7.7% to 11.2%. Is the tyre major still worth the ride, or will input shocks deflate this story?