CEAT, one of India’s largest tyre makers, reported a 96.4% collapse in consolidated net profit to Rs 4 crore for Q1 FY27, down sharply from Rs 112 crore in the same quarter last year, despite revenue growing 22% to Rs 4,318 crore. Shares fell as much as 9% following the results, announced in the second week of August 2026.
EBITDA slipped 6% year-on-year to Rs 365 crore, with EBITDA margin contracting to 8.45% from 10.97% a year earlier. The company attributed the profit collapse to a nearly Rs 50 crore hit from the depreciation of the Sri Lankan rupee against the dollar, which affected debt at its overseas subsidiary, along with losses from newly acquired businesses still in early-stage operations.
Why Did CEAT’s Q1 FY27 Profit Crash Despite Revenue Growth?
The disconnect between 22% revenue growth and a 96% profit decline came down to three factors: currency losses on Sri Lankan rupee-denominated debt, higher raw material costs driven by geopolitical friction in West Asia that pushed up commodity prices, and integration costs from newly acquired businesses, including investment in new warehouses and infrastructure that have not yet reached optimal operating levels.
What Does This Mean for India’s Tyre Industry?
CEAT’s results highlight how currency exposure and geopolitical risk are now material swing factors for Indian tyre makers with overseas operations, separate from the natural rubber price volatility that has traditionally driven margins. The contrast with Apollo Tyres, which posted a 26-fold jump in Q1 FY27 profit to Rs 349 crore on strong India and Europe demand, shows performance diverging sharply within the same sector this earnings season based on each company’s currency and cost exposure.
Market Reaction and Industry Response
CEAT shares dropped as much as 9% on the results before paring some losses, reflecting investor concern over near-term margin visibility. MRF, the market leader, also reported softer profit — down 1.3% to Rs 495 crore — despite 10% revenue growth, as elevated input costs weighed across the sector. Analysts are likely to watch whether CEAT’s forex exposure is hedged going forward and how quickly its newer business investments reach profitability.
What Happens Next for CEAT?
The company will need to stabilise its overseas subsidiary’s currency exposure and accelerate the ramp-up of recently acquired businesses to restore margins. With natural rubber prices up more than 30% year-on-year and West Asia tensions still influencing commodity costs, CEAT’s ability to pass on price increases without denting the 22% revenue growth momentum will be a key focus for the remainder of FY27.
Frequently Asked Questions
Why did CEAT’s profit fall 96% in Q1 FY27?
The decline was driven by nearly Rs 50 crore in forex losses from Sri Lankan rupee depreciation on dollar-denominated debt, higher commodity costs linked to West Asia geopolitical tension, and losses from newly acquired businesses still ramping up operations.
Did CEAT’s revenue also decline in Q1 FY27?
No, CEAT’s revenue from operations actually grew 22% year-on-year to Rs 4,318 crore in Q1 FY27, even as net profit collapsed, showing the hit came from costs and currency rather than demand.
How does CEAT’s Q1 FY27 performance compare to Apollo Tyres?
The two companies diverged sharply: Apollo Tyres’ profit surged 26-fold to Rs 349 crore on strong regional demand and capacity utilisation, while CEAT’s profit crashed 96% to Rs 4 crore due to currency losses and cost inflation.
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