CEAT margin rises for third straight quarter as profit jumps 147% YoY
OEM and international volumes led sequential growth, while faster revenue growth than expenses lifted operating margin by 0.50 percentage points.
Filed 28 Apr 2026, 17:48 IST · after market close · CEAT Ltd (CEATLTD)
Key takeaways
- Consolidated revenue grew 23.34% year on year as expenses rose 19.57%, lifting operating margin by 2.70 percentage points to 14.05%.
- Net profit rose 146.99% year on year despite a 2.86-percentage-point increase in the tax rate, while other income contributed 6.13% of pre-tax profit.
- The stock rose 3.08% on the first session after results but fell 4.52% by day five, against a 1.95% median move after its past eight results.
Price around the results
Revenue growth translated into another margin gain
CEAT’s consolidated revenue growth outpaced expense growth in Q4FY26, allowing operating profit to grow 52.74% year on year and 5.22% sequentially. Sequential revenue rose 1.49% while expenses increased 0.90%, widening operating margin by 0.50 percentage points. The result extends the margin improvement seen in each of the past three quarters.
Profit growth absorbed higher tax and finance costs
The year-on-year tax rate rose 2.86 percentage points and interest expense increased 13.78%, so the sharp net-profit increase was driven primarily by operating improvement rather than a lower tax burden. Other income contributed 6.13% of pre-tax profit, adding a non-operating contribution to earnings. Sequentially, the tax rate fell 0.95 percentage points and interest expense declined 19.35%, supporting the 56.89% rise in net profit.
Margin remains just below the consumer discretionary peer median
CEAT’s 14.05% operating margin was 0.76 percentage points below the 14.81% median for the 93 Consumer Discretionary peers that had reported the same quarter. The margin has nevertheless risen for three straight quarters, from 10.99% in Q1FY26 to 14.05% in Q4FY26. This makes the sequential direction more favourable than the sector-relative position.
Management points to OEM and international volume gains
Management said year-on-year volume growth was positive across segments, while sequential growth was led by OEM and international business; replacement volumes were flat. The company said international business was its fastest-growing segment year on year, while realisations were flat sequentially and improved marginally year on year. Management also reported Rs 407 cr of quarterly capex, a sequential Rs 108 cr increase in net working capital and Rs 10 cr of VRS-related exceptional cost.
Initial market gain reversed within five sessions
After the results, the stock rose 3.08% on the first session, then fell 2.03% the next day and 4.52% by day five. The initial move was larger than the 1.95% median absolute reaction across the past eight results, when the stock rose twice and fell six times.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,219 cr | ₹4,157 cr | +1.49% | +23.34% |
| Other income | ₹21 cr | ₹-47 cr | — | — |
| Expenses | ₹3,626 cr | ₹3,594 cr | +0.90% | +19.57% |
| Operating profit | ₹593 cr | ₹563 cr | +5.22% | +52.74% |
| Operating margin (%) | 14.05% | 13.55% | — | — |
| Interest | ₹85 cr | ₹105 cr | -19.35% | +13.78% |
| Depreciation | ₹184 cr | ₹188 cr | -2.16% | +20.84% |
| Profit before tax | ₹345 cr | ₹223 cr | +54.79% | +157.01% |
| Tax | ₹101 cr | ₹68 cr | +49.96% | +184.80% |
| Net profit | ₹244 cr | ₹155 cr | +56.89% | +146.99% |
| EPS (₹) | ₹60.45 | ₹38.59 | +56.65% | +145.73% |
Operating margin of 14.05% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.08% | +2.32% |
| Next session | -2.03% | — |
| 5 sessions | -4.52% | -5.90% |
| 15 sessions | -9.56% | — |
| 30 sessions | -5.19% | — |
Volume on the results session was 23.60× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- CEAT reported healthy year-on-year volume growth across segments.
- Sequential volume growth was led by OEM and international business, while replacement volumes were flat.
- International business continued to perform well and was the fastest-growing segment year-on-year.
- Realization was flat sequentially and improved marginally year-on-year.
Expansion
- CEAT reported capex outflow of approximately Rs. 407 crore during the quarter.
New initiatives
- CEAT is empowering 194 women through Women Entrepreneurship Development Training across four locations.
Problems & risks
- Net working capital increased sequentially by approximately Rs. 108 crore.
- CEAT incurred approximately Rs. 10 crore during the quarter for VRS activity.
What to watch
- Whether operating margin holds above 14.05% after three consecutive quarterly increases.
- Whether replacement volumes move beyond the flat sequential trend reported in Q4FY26.
- Whether the Rs 108 cr sequential increase in net working capital and Rs 407 cr quarterly capex reverse or persist.