CEAT to invest Rs 1,400 crore in FY27 amid rising demand and input cost pressures

CEAT has announced a significant capital expenditure plan of Rs 1,400 crore for FY27, signaling strong confidence in sustained demand across the tyre segment. The move comes at a time when the company is navigating rising input costs, particularly raw materials, while aiming to strengthen its production capabilities and market position in India’s competitive tyre industry.

Key Highlights

• CEAT to invest Rs 1,350-1,400 crore in FY27 for capacity expansion
• First quarter capex limited to Rs 200-250 crore due to uncertainty
• Capacity utilisation remains above 90 percent across company operations
• Raw material prices expected to rise over 15 percent in Q1FY27
• The debt-to-EBITDA ratio improved to 1.46x by end of Q4FY26

Capex Strategy and Utilisation

Managing Director and CEO Arnab Banerjee stated that only essential capital expenditure, amounting to Rs 200-250 crore, will be made in the first quarter. The total planned capex for the year, including growth and maintenance, stands at Rs 1,300-1,400 crore. Banerjee said the company will adjust its approach each quarter based on market conditions.

Chief Financial Officer Kumar Subbiah reported that CEAT’s capacity utilization is above 90%. In Q4FY26, the company increased capex to ₹407 crore, compared to the usual Rs 200-250 crore per quarter. This higher spend was to ensure capacity additions align with current demand.

Investments and Financial Position

CEAT is also investing in its Camso operations. Banerjee said the company is building an upstream facility, expected to be ready by March next year. The capex for this project is estimated at $30 million, with about 75% of the cash outflow scheduled for the current year.

Subbiah noted that CEAT’s balance sheet can support these investments. Consolidated debt stood at Rs 3,011 crore at the end of Q4FY26, while standalone debt was Rs 2,961 crore, similar to the previous quarter. The consolidated debt-to-EBITDA ratio improved to 1.46x from 1.58x in Q3FY26, and the debt-to-equity ratio was 0.60x.

Rising Input Costs and Demand Outlook

CEAT faces a sharp increase in raw material prices, expected to rise by over 15% in Q1FY27 and possibly reach 20% by the quarter’s end. The company plans to address this through price increases and cost management. Despite these challenges, CEAT expects demand fundamentals to remain strong. Banerjee described FY26 as a robust year for growth and profitability and said the company will continue to invest in capacity while adjusting spending as needed.

While input cost inflation presents a near-term challenge, CEAT believes structural demand drivers remain intact. The company’s capex plan comes as the government allows the import of BMS for electric trucks availing a subsidy only until August 31. A high-level meeting was held with banks, vehicle manufacturers, and transport operators to discuss the situation.

CarBike 360 Says

CEAT’s Rs 1,400 crore investment signals a clear focus on long-term growth despite short-term cost challenges. By expanding capacity and strengthening its market position, the company aims to capitalize on rising demand across segments. However, managing volatile input costs will remain crucial in sustaining profitability and ensuring steady momentum in the competitive tyre industry.