CEAT to expand two-wheeler tyre capacity with Rs 1,205 crore investment

CEAT will invest Rs 1,205 crore to expand its two-wheeler tyre manufacturing capacity by about 66%. The company aims to increase daily production to 1.33 lakh tyres from the current 80,000 units. This expansion comes as the Nagpur plant's existing capacity nears full utilisation, currently operating at around 95%.

Key Highlights

• CEAT to invest Rs 1,205 crore to expand two-wheeler tyre capacity by 66 percent.
• Daily production to rise from 80,000 to 1.33 lakh tyres by FY31.
• Q1 FY27 consolidated revenue is up 22 percent year-on-year to Rs 4,318 crore.
• EBITDA margin declined to 8.56 percent due to higher raw-material costs.
• CEAT holds an estimated 18% share in the domestic electric two-wheeler OE tyre market.

Expansion Details and Timeline

The board of CEAT approved the investment, which will be funded through internal accruals and debt. The company plans to add approximately 53,000 tyres per day in phases by the end of FY31. CEAT has not disclosed the location of the new capacity or the investment breakdown for each phase. The expansion may involve either greenfield or brownfield projects, depending on internal assessments.

The proposed addition equals about two-thirds of CEAT's current two-wheeler tyre capacity. The company has not specified how the increased output will be allocated among original equipment manufacturers, the replacement market, or exports. The move follows strong growth in CEAT's two-wheeler tyre business, with replacement sales growing in the mid-20s percentage range during the March quarter of FY26. Demand has surpassed pre-Covid levels, and capacity utilisation across product categories reached 85-90%, with plans to maintain utilisation above 90%.

Financial Performance and Market Position

CEAT reported consolidated revenue of Rs 4,318 crore for Q1 FY27, a 22% increase year-on-year. This growth was driven by healthy demand and high capacity utilisation. However, the EBITDA margin fell to 8.56% from 10.94% a year earlier, and net profit dropped to ₹4 crore from Rs 112 crore.

The company attributed the margin decline to higher raw-material costs following the West Asia crisis. On a standalone basis, revenue rose 18% to Rs 4,163 crore, while net profit decreased to Rs 98 crore from Rs 135 crore.

To manage cost pressures, CEAT implemented cumulative price increases of 5%. The company expects raw-material prices to remain high in the second quarter. During Q4 FY26, CEAT indicated a total capital expenditure requirement of Rs 1,300-1,400 crore for FY27, covering both growth and routine investments. Spending will be reviewed quarterly based on demand and the operating environment. The company has not specified how much of the Rs 1,205-crore two-wheeler project will be spent during FY27, as the investment will be spread over several years through FY31.

Strategic Focus and Future Plans

CEAT is also increasing its presence in the electric two-wheeler segment. The company estimates an 18% share of the domestic electric two-wheeler original-equipment tyre market and is involved in several upcoming vehicle launches. CEAT has not clarified whether the new capacity will focus on conventional two-wheelers, electric scooters, premium motorcycles, or a mix of these categories.

In the first quarter of FY27, CEAT spent about Rs 300 crore on capital expenditure, mainly to enhance capacity and support its business plan. The company continues to control discretionary expenses and routine capital expenditure to conserve cash. Managing Director and CEO Arnab Banerjee stated that strong double-digit revenue growth was achieved despite margin pressures, supported by robust demand and high capacity utilisation.

Also Read: CEAT SportDrive CALM tyres improve Audi A7 comfort and performance

CarBike 360 Says

CEAT’s planned investment signals a strong push to capture growing demand in India’s two-wheeler segment while strengthening its manufacturing footprint. By expanding capacity and improving efficiency, the company is positioning itself for long-term growth, improved supply capabilities, and enhanced competitiveness in both domestic and export markets, aligning with evolving mobility trends and rising consumer demand.