Thank you, Ryan. Good afternoon, everyone.

On behalf of JM Financial, I welcome you all to Q4 and full year 2026 result conference call of CEAT Limited. From the management side, we have Mr.

Arnab Banerjee, Managing Director and CEO, and Mr. Kumar Subbiah, Chief Financial Officer.

I would now like to hand over the call to Arnab sir for his opening remarks. Over to you, sir.

Good afternoon and welcome to CEAT's Q4 earnings call. I'll be taking you through the business updates for this quarter and then I shall hand it over to Kumar for his remarks on the financial performance, and then we'll have the Q&A.

For the industry, FY26 was a year of two halves. While the first 6 months were moving along at a normal pace and we had double-digit growth in first half as well, late September proved to be a reset turning point with GST rate reduction.

This meaningfully reduced the effective tax burden across tyre categories, improving overall affordability and the sentiment across aftermarket and OEMs. Coming to demand outlook, near-term demand would be shaped by multiple variables.

While seasonality during summer months augurs well, the broader demand environment remains clouded by the West Asia conflict and related fuel price expectation. Recently concluded Rabi harvest should, however, improve cash flows and sustain rural demand in the near term.

As of now, as we enter FY27, demand looks good in aftermarket, in OEMs, but there is also an attendant steep raw material price hike which we can discuss later. Overall demand outlook is expected to moderate out therefore, but broadly may remain supportive.

In the near term, we expect replacement demand for MHCV to be in high single-digit arising out of increased economic activity, positive seasonality, and an aging fleet. For two-wheeler, demand has been encouraging with consumption levels surpassing pre-COVID levels.

Our passenger tyre demand has been somewhat muted in replacement, but may increase in the coming year post an increase in OE sales in the last year. In OEM, MHCV is witnessing continued strength post GST rationalization.

Growth has been robust in Q4 in high double-digit. Light commercial vehicle growth is also strong, and passenger cars near-term growth is expected to be healthy single-digit with passenger car SUV-MPV categories looking stronger than sedans per se.

In international business, we are seeing signs of recovery in multiple segments, particularly across CVs in US and Europe. Passenger car tyre business is also strong, particularly in Europe.

However, geopolitical uncertainties remain a key monitorable. Sales to Middle East obviously have been severely impacted in quarter four.

As we are entering a steep inflation zone in quarter one, we will see moderation in demand by the end of quarter one moving into quarter two, but the basic fundamentals otherwise remain strong. As far as our financial performance goes, we had a good quarter four where our revenue grew 18.2% YoY on a standalone basis.

For the full year, we have been maintaining that we are looking at an overall double-digit growth. Happy to share that on a full year standalone basis, we grew by 14- 15.5%.

Also standalone EBITDA stood at ₹587 crore, significantly crossing the ₹500 crore milestone, and also the ₹2,000 crore milestone in a year. Growth momentum continued in quarter four over last year.

We had an 18.2% value growth. Replacement grew in mid-teens, OE also grew around mid-teens, and international business had a very strong quarter in quarter four.

We have grown in off-highway tyre and passenger category tyres in Western Europe very well. In replacement, two-wheeler continues to do well and grew strongly in the mid-20s in quarter four.

Truck, bus, and farm also came back strongly in quarter four where growth rate was in low-teens. Replacement PCUV grew in mid-single digit in quarter four, but on a full year basis, the growth was slightly better.

OEMs, we had a healthy growth. Passenger car segments saw very high growth where we had a lower base as well, and very strong double-digit growth with significant share in premium vehicles.

In two-wheeler, we maintained our strong single-digit growth even in this year. Farm growth in OEM continued to show resilience, again strong double-digit growth here.

Truck-bus saw low double-digit growth in quarter four. International business, it came back very strongly across segments: passenger car tyres in Western Europe, US, across the markets very strong growth; two-three wheeler, again, we ventured into new markets and the base is small, growth looks very impressive; farm was also pretty good in quarter four.

Overall, I think across farm, two-three wheeler, and passenger, growth was very, very strong. In truck-bus radial also, we had a decent growth, but not as strong as the other three segments.

Share of business during quarter four on a full year basis, in replacement market, our share of business was positive across categories: in PCUV about 0.5% up, in motorcycle about 1% up, in scooter it was flattish over quarter-on-quarter, in truck-bus radial also about 0.5% up in replacement. In OEMs in quarter four, we grew in scooter in terms of share, and we were slightly down in passenger car segment, less than about a percent down, and about a percent down in motorcycle, but these are minor adjustments in terms of models and production ramp-up and the fitments that we have in those models.

In truck-bus radial also, it was slightly down for the same reason. Quarter four margins, gross margins were almost similar to quarter three, about 19 basis points down QoQ.

Our raw material prices in Q4 was slightly higher than Q3, but in Q1 it will shoot up to 15% plus by end of Q1, we may reach closer to 20%. This is a steep increase over a span of 3 months, and the outlook is that we can manage only a small portion of it through cost optimization, price increase is an imperative.

In OEM, the price increase comes with a lag, 1st July we'll get a big increase. We have got a small single-digit increase in quarter one.

In replacement, we have already taken in between March and April, and by April end, we will be about 5% up. We need to take another at least 5% price hike through the month of May and June, which we are planning.

In international business, we have been taking up prices in stages adding up to close to 10%, but there is an order base which we have which is at least about 30 days, the pass-through in terms of execution and realization will take some time. In quarter four, our EBITDA margin stood at 14.6%, 13.4% for the full year, and we have been pretty much consistent through quarter two, quarter three, and quarter four as we always try to be.

Our standalone net profit in Q4 was ₹283 crore and ₹812 crore for the full year. As far as Camso is concerned, the operations are continuing smoothly.

The production was affected due to non-availability of fuel locally for some time in Sri Lanka, and overall revenues for Camso was similar to quarter three, down about 5% from quarter three. As you are aware, the Camso business is in transition and will continue to be in transition for at least four more quarters.

At the outset, we had said four to six quarters, and two quarters have gone. By end of FY27, the entire value chain may be under our control.

By end of first half, the sales side, which is the customer interface, should be in our control. However, the purchase side, where we are buying compounds, will come to our hands only when we erect the upstream equipment of calendar and mixer, which is expected to happen by end of quarter four.

That's how it is in Camso. As far as the other trends are concerned, electrification, international business, premiumization, and digital, I shall brief you shortly on that.

We continue to focus on market shares in OEM on electric vehicles. In passenger, we are sitting at about 29% share, and in two-wheeler, it's about 18%, and we are participating in almost all the new launches that are coming up in four-wheeler and two-wheeler in the domestic market.

In international markets, our saliency has improved from 19% to 20.4% in quarter four, which is on a standalone basis, and along with Camso, it has gone in excess of 23%, and this is an important metric for us as I have mentioned that this is margin-accretive business for us. About 130+ new off-highway SKUs were launched, which gives robustness to our product portfolio.

We have set up overseas entities and branches in Germany, UK, France, and Poland to build a more permanent, localized presence in these and adjacent market. In the non-specialty business, we have clocked high growth in the 20s in quarter four on YoY basis, in the high 20s.

This was despite the fact that substantial headwinds this year we faced from US tariffs initially and the recent geopolitical unrest in the Middle East. For premiumization, we have been continuously focusing on 17-inch+ sales of passenger vehicles.

The saliency and market share in that segment has significantly improved in Q4 over Q3. Our sales in the two-wheeler premium segment, which is 250+ cc 250cc+ vehicles, has been also increasing consistently, and Q4 reached a new high in terms of these premium sales as well.

In truck-bus radial also, we have started premiumizing, and we have launched a couple of absolutely top-of-the-line premium products, which gives a lower TCO to our customers. Digital and AI, our digital transformation continued to advance in Q4.

Building our AI capabilities, our focus is on democratizing the AI capability across the enterprise and driving value at scale. We want to make it accessible and practical and embedding it into day-to-day workflows and decision-making.

To enable this shift, we are strengthening our data and capability foundation. Q4 included a kickoff of our centralized enterprise data lake, linking core data onto a single governed platform alongside the initiation of our transition to SAP RISE to unlock advanced analytics and AI-led efficiencies.

We are also instituting a data governance council for responsible and compliant use of AI and setting up an AI lab as a center of excellence to anchor innovation and upskill our workforce. Together, these initiatives will support a structured and scalable approach to AI adoption across the organization.

US tariffs on on-road tyres, which is PCUV and truck-bus radial, our tariffs continue to stay at 25% incremental plus the original tariff of around 4%. In OHT, it has been reduced from 50% now to 10%, and as we know that a court order in terms of refunding this tariff, we are following up to see what happens in OHT.

No such refund, etc., are applicable to on-road tyres because that was Section 232 tariffs, which are not reciprocal tariffs. Capex, our capacity utilization is on the higher side right now, in 85% to 90% range across the categories.

Looking at the current situation in quarter one, we are going with absolutely mandatory capex, about maybe ₹200 to ₹250 crore. For our growth capex plus our normal capex, we need about ₹1,300 to ₹400 crore, ₹1,400 crore capex during the year.

We'll calibrate our approach as we go along quarter-to-quarter. Sustainability, we have received SBTi validation for company-wide emissions reductions aligned with science-based net-zero targets focusing on energy efficiency, green energy adoption, responsible resource use, and continuous performance monitoring.

During Q4, our Halol plant was formally awarded SA8000 certification, which is concerned about social accountability. Gradually, we'll cover the other plants also with this certification.

We achieved S&P Global ESG score of 69 on 100 in 2025 Corporate Sustainability Assessment, which places us in the top 4% of companies in APX auto component industries globally. Overall, FY26 proved to be a robust growth year and a good year for profitability as well.

As we enter FY27, while input cost inflation presents a near-term headwind, structural demand drivers remain in place, providing the resilience and momentum needed to navigate this phase and sustain future growth. With this, I would like to hand over now to Kumar for his remarks.

Thank you, Arnab. Good afternoon, ladies and gentlemen.

Thank you all for joining our quarter four FY26 earnings call. I'll share some further financial data points with you all, post which we can enter the Q&A session.

Coming to overall financial performance, we ended the year and quarter with some key milestones relating to revenue. Considering our consolidated numbers for the current year include our acquisition of Camso business during the course of the year, I would like to call out our standalone financial numbers in parallel so that the comparison of our performance versus last year come out more clearly to you all.

Our consolidated revenue for the quarter stood at ₹4,219 crore, and standalone revenue stood at ₹4,036 crore. Our standalone revenue grew by 18% year-on-year basis.

We'd like to inform you that our standalone revenue crossed an important milestone of ₹4,000 crore in a quarter for the first time in the preceding quarter. Our full-year consolidated revenue stood at ₹15,678 crore, and the standalone revenue for the year stood at ₹15,215 crore.

The standalone growth was about 15.5% on a full-year basis. Here again, our standalone revenue crossed an important annual milestone of crossing ₹15,000 crore for the first time during the year.

It is important for everyone to note that our revenue grew in double digits in all the four quarters of the year. The growth in the second half of the year was higher than the first half of the year, as Arnab mentioned, largely benefiting from the drop in GST rates for vehicle manufacturers, particularly two-wheelers and lower-end passenger cars, and also reduction in GST rate on tyres from 28% to 18% for most of the tyre categories, and except in case of farm tyres where the rate reduction was from 18% to 5%.

The growth was driven by a combination of both volume and price. During FY26, the replacement business delivered a strong double-digit growth, while international business came back strongly in the second half of the year delivering high-teens and over the same period over the last year, and OEM registered 20%+ kind of a growth, laying a healthy foundation for the future replacement demand.

Coming to margin, our standalone gross margin for quarter four stood at 39.7%, a marginal contraction of about 19 basis points sequentially. While raw material prices went up towards the end of the year, the raw material cost for the quarter more or less remained in line with the previous quarter, and also as shared by with us shared by us with you in the last quarter in terms of our own forecast.

Coming to EBITDA margins, our consolidated EBITDA for quarter four stood at ₹598 crore, translating to about 14.2% in margin percentage terms. Our standalone EBITDA stood at ₹587 crore.

It's a 51 basis points expansion sequentially, and expansion of 299 basis points year-on-year basis. For the full year, our consolidated EBITDA stood at ₹2,063 crore, translating to 13.2% margin.

Our standalone EBITDA stood at ₹2,042 crore, which is a 214 basis points improvement versus FY25. This marks a significant moment for us as our continued efforts and prudence propelled us past ₹2,000 crore EBITDA milestone for the first time.

Coming to raw materials, Arnab had already shared the details. At a very high level, during the beginning of the quarter four, the crude prices were hovering around $65.

However, it surged past $100 per barrel mark by the beginning of March, and continue to operate at these elevated levels. As we speak, the crude is currently hovering around $107.

Unlike previous quarters where volatility was driven by sentiment, we are now navigating a scenario of actual and physical disruption. With regard to natural rubber, while the international prices remained subdued at around $1,700 in the previous quarter, however, in the current quarter, it started with $1,800 level and gradually now hovering around $2,050 to $2,100 per ton.

With the linkage to import parity in the domestic prices of natural rubber, and also on account of depreciation of rupee, the natural rubber prices in India has gone up from ₹190 per kg level in the beginning of quarter four to around ₹245 per kg as we speak now. Rupee has remained volatile, and further depreciation in quarter four from around ₹90 to ₹91 to a dollar to around ₹94 to a dollar now would also have additional impact on our cost going into quarter one.

During quarter four, our raw materials were broadly in line with quarter three as I had mentioned earlier. We benefited from lower-cost inventory during quarter four.

The full impact of the recent increase in raw material costs will materialize in quarter one of the current financial year, which we would try to manage through combination of price increase and cost management in the first half of the year. While we remain vigilant in our procurement strategies, the combination of new geopolitical risks, premiums, and physical supply constraints require us more rigorous monitoring all of these developments on a day-to-day basis.

Coming to capex, working capital, and debt, as Arnab mentioned, our plant capacity utilization levels are higher, 90%+ level. We stepped up our capex in quarter four to ₹407 crore for the quarter, higher than around ₹200 to ₹250 crore of flow in the previous quarters.

Overall, our capex was about ₹1,076 crore in year FY26. The capex was higher in quarter four was to ensure that our capacity additions happen in line with our demand in the current year as our utilization levels are high.

In addition, we also had an outlay of about ₹236 crore in quarter two towards acquisition of intangibles with respect to Camso. On a standalone basis, the working capital increased by about ₹108 crore as compared to quarter three.

On a full-year basis, the operating working capital moved from -₹31 crore in the beginning of the year to + +₹108 crore, an increase of ₹139 crore. This is mainly on account of accumulation of some GST credit balances in two of our states to the tune of about ₹120 crore, plus some increase in receivables on exports due to longer cycle time involved in exports and increase in dues from some state governments with respect to incentives.

We're taking necessary support steps to ensure that we get back to negative working capital zone soon. Our consolidated debt stood at ₹3,011 crore, and standalone debt stood at ₹2,961 crore, very similar to the level that we were in as of end of quarter three.

Our debt-to-EBITDA on a consolidated basis stands at comfortable level of 1.46, down from about 1.58 as of quarter three. Debt-to-equity is about 0.6.

Our balance sheet is strong enough to provide and continue to provide growth capital to the business. Coming to operational expenses, operating our standalone employee cost declined marginally in quarter four compared to previous quarter, and consolidated increased by about ₹18 crore, largely attributable to additional manpower hiring that happened at Camso.

During quarter four, other expenses as a percentage came down from 19.6% to 18.5%, translating to margin expansion on our profits. The drop was also absolute basis as it decreased by about ₹34 crore sequentially due to lower outsourcing and other operating expenses.

Overall, we kept tight control on cost, which helped maintain our margin profile during quarter four despite inflationary scenario. Depreciation and interest at consolidated level for the quarter remained at similar levels as that of the previous quarter.

Consolidated and standalone interest came down by about ₹20 crore, largely on account of lower interest on security deposit and also on account of average debt level being lower in quarter four. Overall profitability, our overall consolidated profit for the quarter stood at ₹243.8 crore, which compares favorably with ₹98.7 crore during the same quarter of last year and ₹155.4 crore in the previous quarter.

Our standalone profit for the year stood for the quarter stood at ₹283.6 crore, again compares favorably with ₹100.4 crore of that we reported during the same period of previous year and ₹191.6 crore that we reported in quarter three. Our quarter four profit after tax included amount of after adjusting an amount of ₹10 crore of exceptional item towards voluntary retirement scheme option provided to our the employees in one of our factories.

Overall, the company reported a profit after tax on a full-year basis ₹812.72 crore on a standalone basis and ₹697.24 crore on consolidated basis, translating to an EPS of 201.17 per share on a standalone basis and ₹172.78 on a consolidated basis, respectively. We're also pleased to inform you that our board of directors in the meeting yesterday recommended a dividend of 350% for the financial year 2025-26, which translates to ₹35 per share.

The dividend would be paid post obtaining the formal approval of shareholders. Thank you once again, all.

With that, we can now open the floor for Q&A.

Thanks for the opportunity, sir. Sir, first question is on the commodity side.

You mentioned a 15% RM cost increase in the first quarter. Possible to highlight, does that fully reflect the current RM which you said about rubber being at 250 and crude being at 107, or what level does it represent, and if we look at the current commodity prices, how much more increase do you think can happen on the cost side for our basket maybe in the next one or two quarters?

Now, first of all, we'd like to clarify that situation is dynamic. Just now we mentioned crude is 107.

If we have had this call a week back, we would have also said crude is 95 or 94. Therefore, it's a dynamic situation.

Considering we buy raw materials or cover ourselves on an average over a period of next 3 months, including imports, okay, our visibility with respect to our current quarter is reasonable. Based on inventory that we are carrying, and including both raw materials and finished goods, plus the raw materials that we have ordered, okay, we feel that raw material cost increase in quarter one could be to the tune of 15%.

If you were to take a replacement cost of raw materials today, okay, the number could be a little higher than 15%. I think we should wait and watch beyond quarter one in terms of what impact it would have.

It entirely depends on how things unfold during the balance part of the current quarter for us to get a visibility of quarter two.

Understood, sir. On the price increase, if you can also talk about till now what has been the cumulative price increase maybe till June you look to take, you talked about 5% or mid-single digit till April and another 5% by June, does that mean in quarter one we can potentially take till the end about a 10% price increase or you think it will be more staggered and visible over the next two quarters?

We need to take overall 10% vis-a-vis March. In replacement, out of that, about 5% can be considered as taken already between March and April.

That leaves a balance of 5%, which will be staggered through May and June. It won't be one shot.

It is also dependent on how the competitive situation plays out, how the demand plays out. We need to take another 5% and we intend to take another 5%.

That's what is being said in a staggered manner through May and June. In OEM, it is indexed, we have got one index price hike, which is a low single-digit kind of price hike basis the index on 1st of April.

On 1st of July, we will get a heavier price hike hopefully based on the index, there will be a lag. In international business, again, we are trying to cover up the entire 5% in terms of announcements, but the pass-through and execution and realization will take 30 to 45 days because of the order base that we keep holding.

It will not again be a single. I think we have already taken 3% to 5% in international.

Another 5% announcement is being made in maybe 1 or 2 weeks' time. It will gradually pass through within the end of quarter one hopefully to the extent of around 8%.

We'll have to see what is the order base and what is the pass-through. That's the plan.

Understood, sir. Second question is on Camso.

We have seen probably some of the execution getting stretched out. If you can give us some color in terms of the revenue ramp-up.

We earlier expected maybe second half we do see a stronger pickup as we would have been operating now for around a year. When should we expect some of that revenue ramp-up to happen, and maybe in FY28 what are the production levels you are targeting for Camso?

Similarly on margins, do you expect a double-digit sort of margin target achievable by the second half or FY27 or that may also take longer?

The Camso business is with us right now in transition phase. Let me just refresh what is the transition phase.

In transition phase, we sell the goods through Michelin and not to our customers, and Michelin's sales team is selling it to the customers. About 25% to 30% margin of the overall value chain is sitting there.

Then at our back end, we are not buying the raw materials. We are buying compounds from Michelin because the plant, as we acquired, didn't have the upstream equipment of mixer and calendar.

This will take, I'm first talking about the back end, this will take at least six quarters. Four to six we have been saying, which means we took over the business in September '25.

We will be able to complete this job by March '27. That is roughly about six quarters.

The front room, the activity will accelerate further faster. We are planning to take over the customer interface to the extent of about 90% by September '26, which is by the end of quarter two.

Now what we can look forward to therefore, once we take over the customer interface, the entire sales and marketing setup will be in our hand. We are almost done with setting up the field force.

Some more recruitments are still being made. That is the time when we can look at interacting with our customers in aftermarket and OEM and taking up the turnover.

The volume increase and the value increase can only happen therefore in the second half and not prior to that when Michelin is handling the customer. Within aftermarket and OEM, we expect to stabilize and grow in aftermarket faster.

In OEM, as you can understand, we'll have to do the new product development, get onto the new vehicles of the OEM. It will be slightly later, maybe in FY28 the growth of OEMs will start coming.

Aftermarket should start happening in the second half of this financial year. That is as far as growth goes.

The fixed costs are more or less fixed. When we talk of margins, we have started activating the marketing campaigns.

We have started setting up the network, which is warehousing and local field people in Europe and in US. We have also started recruiting, as I said, the sales guys.

We have started recruiting the R&D guys also. All these costs we will start incurring even now when sales is not going up, so that we are completely prepared in the second half to take sales up.

Finally, at the end of this year in FY26 when the equipments are also established in the factory, we'll gain that part of the value chain also. Turnover will start increasing in second half of this year, margin will start getting impacted by FY28.

Got it, sir. I'll come back in the queue.

Good evening team. Thank you so much for the opportunity.

A few clarifications. Firstly, for Q4 FY26 standalone, sir, can you please share the volume growth YoY and also the growth for OEM, replacement, and exports?

Volume growth YoY is close to 20% overall, right, quarter four to quarter four. The growth across the segments have been pretty much uniform, a little higher in international business, mid-20s, and it is about mid-teens to 20s for replacement and OEM.

Got it, sir. Thank you.

Second on Camso, would the US tariffs now be at that same rate of 10% or

is

there a different tariff?

No, the tariff will be at 10% and the metals, part of tracks, which is a little metal clip that goes on the under surface of the track, that will be tariffed at 50% 25%.

Noted, sir. Thank you for that.

The tracks would be what percentage of revenue, sir, for Camso within US?

Tracks is roughly 50%.

Noted, sir. Got it.

In terms of export markets, how much would be our Middle East exposure? Would you expect that to be an overhang for growth in FY27 or would you expect double-digit growth to continue for '27?

Middle East is about 15-odd% for us, so that will be a little uncertain. It was practically zero in quarter four.

Towards the end of quarter four, it may not be zero, but it won't be 15%. As I mentioned, our international business basket is widely diversified towards Southeast Asia, Europe, US, and also LATAM.

If you look at the global potential, we are a very small player in that perspective, we have tremendous potential for growth. If we had Middle East, the growth would have been higher, but I think we'll be able to make up Middle East like we did in quarter four.

Quarter one outlook order-base-wise looks good after completely discounting Middle East, whatever comes from Middle East will be a bonus.

Noted, sir. That's good to hear.

For FY27, what would be the total console capex expected, sir?

Okay. You see, India overall, excluding Camso, our capex should be about 25% more than what we had incurred last year, which is about ₹1,076 crore was our last year.

It should be in the range of ₹1,350 to ₹1,400 crore for India. We would be frugal and careful in quarter one considering current situation, and we'll scale up as we go by once things normalize, but this is a kind of a number that we have in mind so that we are able to create capacities to meet our demand.

As far as Camso operations are concerned, I think we had shared it in the past, and just now when Arnab also in response to another question spoke about creating an upstream facility to be ready by March next year, we had estimated that capex to be around $30 million approximately, and out of that maybe a 3/4 of that we would be spending in the current year in terms of cash flow in that range. That will be in addition to this number.

The number relating to upstream is part of our capex estimate in the business case itself.

Noted, sir. This is very helpful.

Just a last question, and thanks so much for answering all the questions and for the detailed answers. Just a last question, how are you seeing the competition scenario in terms of price increases?

Given that industry is going through tough times, are you seeing players across categories taking price increases or is there any worries that there could be delays in the price hikes?

The market is competitive, it's difficult to predict. However, so far what I have observed is that price increases are coming through, much delayed by some competitors, but at different categories, at different dates, some price increases have definitely come through in the month of March and April.

Noted, sir. Thank you so much.

I'll fall back to the queue.

Thank you sir for the opportunity. Sir, generally replacement market we have seen past grew in the single digit high single digit.

In Q3, we had the postponer postponement of demand from Q3, and Q4 of Q4 also we've seen very strong demand. Is it partly, sir, due to some reason like because there was price hike expected in Q1, there was some pre-ponement of demand or or generally you saw the better demand due to GST?

No, that I can answer categorically, there was no impact of expected price hike in quarter one on quarter four sales. Quarter even March end price hike was not like 5%.

It has been staggered through the month of March and April, the entire 5% that I talked about. It is the GST decrease-led momentum that has carried forward from quarter three to quarter four.

Also, this is this is true because it is across category and it is across markets. It's a secular demand increase and not something which is particularly fixed on a certain geography-market combination.

It is because of that momentum.

Got it, sir. Sir, now in the Q1 in April month, sir, with the war environment and kind of price hikes happening, sir, did you see any change in the pattern?

Is it become more softer now, sir?

Quarter one usually is a good quarter in terms of consumption of tyres, specially in the commercial segment, and then by end of quarter one with the onset of monsoons, the passenger segments also pick up. Generally, it is a good quarter demand-wise.

The momentum of Q3, Q4 continues into quarter one exactly like it was. That's number one.

However, because of the steep price increase of raw material, we have been able to pass on only half of that, right, even that little bit of it is happening in the last week of April. The full impact of the price increase has not yet been experienced by the markets.

As it experiences 5% to 10% price hike through quarter one, we expect some moderation of demand.

Got it, sir. Great to hear the demand continues to be.

Sir, just on the Camso side, because of the lower duty, sir, in the end market are you seeing a better demand trend? Also just want to understand how this RM inflation impacts the Camso margin, sir?

How that pass-through would happen and anything on the freight cost increase there also?

Freight cost increase is 2 to 3 times in several markets. Normally that is recovered through a freight surcharge, which we are doing across categories.

The lower taxes resulting in higher demand in US market is not very much evident to us because we're not handling the customers directly as I mentioned. Once we start handling the customer interface directly, I think we'll be able to leverage such changes much better.

Right now, it is not very much apparent.

Right. Just on this RM inflation for Camso, how would the margins would be passed through, sir, to the...

That happens more like the OEM sales. There is a periodic assessment index-wise, material index-wise, and that is how the pricing is adjusted between us and Michelin.

Got it, sir.

On both sides, because we buy compounds from them, we also sell them the finished goods. On both sides, adjustments happen.

Understood. Got it, sir.

Thank you so so much for the opportunity, sir. Thank you.

Thank you for the opportunity. Just a follow-up on the pricing scenario in the industry, right?

Particularly, just talking about the leader MRF, at least so far whatever picked up is they have taken select price hikes in LCV and maybe farm segment, but nothing much have been taken in two-wheeler, PCR, and CV segment. Is that understanding correct, and let's say if in next quarter let's say next couple of months also if they don't take price increase, will it be easier for us or we'll also rethink our strategy on pricing because at least on the two-wheeler side, they are the let's say two-wheeler and CVs, they are the like top player, right?

What's what's our thought on this?

Couple of corrections. MRF has taken price increases in all the segments to the best of our knowledge, including two-wheeler and passenger.

They took it in a staggered manner, but it has come through.

Okay. Understood.

What would be the quantum of that? Hello?

Sure. Just on the MRF question, sir, do by any chance you have idea what quantum of price increases they have taken so far?

About I think 3-3.5% they have taken roughly. I don't recall category-wise, but that's a good estimate.

Understood. Secondly just let's say just thinking about demand from let's say beyond first half, if we take a 10% if you're able to take a 10% price increase and especially in the CV segment which is relatively more price-sensitive, how should we think about demand because second half the base will also become, pretty high for us given that second half of FY26 we have seen a very strong healthy double-digit growth.

Is there a risk that, the industry itself may decline in second half given 10% or whatever quantum of price increase plus the base itself on the replacement side?

On the replacement side, the reduction of GST is a tailwind definitely towards in all categories, number one. Number two, the vehicle park is increasing significantly because of higher sales of OE vehicles, right?

In the truck-bus segment, as you would appreciate, the life cycle of the tyre is much shorter, unlike the passenger segment. If the overall goods movement, which is again dependent on the GDP growth, if overall goods segment is not impacted too much, if the fuel price hike is moderate, there are many things that are involved, right?

If the trucks are plying, if the rates are holding, the remuneration rate for the truckers, they will replace tyres. We expect moderation in demand, but it not like we don't expect a degrowth in truck-bus radial tyre even after a 10% price hike, but definitely it will slow down.

Sir. What explains such a strong growth in second half?

Right, if GST is the trigger where there is a 10% reduction in prices and effectively now we'll be reversing the GST cut, right, with the price hike. Shouldn't there be some normalization over there because if GST and obviously the normal replacement cycle, then the ideal let's say the normalized growth has to be 6-7% and what we have witnessed at least over the last couple of months is 15% to 20% growth.

What explains this and if the price increases do happen, then shouldn't kind of demand normalize back to the 5-6% levels?

You're right. I think you are talking of the OEM demand, if I understand you correctly.

Yes, that would not definitely come down to single digit, the fresh truck sales. I was more talking of the truck-bus tyre sales, I won't repeat my answer, I think you understand.

Sorry sir, I was talking only about replacement, not OEMs. Yeah.

Okay.

Replacement demand will be in single digit in truck-bus radial. There will be a moderation, single digit.

It may fall to low single-digit also, which we are used to in truck-bus radial if the 10% price hike is not adjusted in the market. It all depends on how fuel prices behave, how the overall GDP sentiment moves.

If there is a demand for movement of trucks, tyres will need replacement, and tyres will be replaced. The demand will come down, but it won't turn into negative territory.

That's what I was trying to say. Understood.

Sir, any comments on how the growth should look for PCR and two-wheeler replacement like in the second half and beyond?

PCR as you are aware was not great even in last year. The market grew by hardly 1% to 2% in replacement, right?

Again, vehicle park is coming in, but here the replacement cycles are long. We expect a gradual improvement in PCR, not like PCR going to 10% or 15%, maybe from 1% to 2% it can go to 3% to 4% or 5% at best.

In two-wheeler, we have had good growth, specially in the scooter segment, scooterization, the EV, and it's supported by growth in both urban and rural markets. Some moderation could happen because of price increase, but it should stay as per our expectation in single-digit, high single-digit kind of growth across this year as well.

That's the expectation in replacement.

Understood. Thank you, sir.

Just lasting on finance cost and other income, right? Finance cost, how should we think about going into FY27 with it's a ₹3,000 crore debt and 8-9% is the interest cost, 7-8% is how we should think about the annualized finance cost and what drove the sharp increase in other income this quarter?

Okay. Now two things with respect to finance cost.

See generally, the finance cost includes interest on our debt as well as some security deposits that we have of our dealers and distributor. That interest is also part of our finance cost, in addition to some banking-related expenses.

Our debt level more or less remained around ₹3,000 crore for the last three quarters. September, we were close to about a little over ₹2,900 crore, December also similar levels, and March also.

I'm talking about standalone. Consolidated also not very different from that standpoint.

That is one of the reasons. Going into next year, of course, we have to generate enough cash to sustain debt level if we have to manage our capex program as we have just outlined.

We'll continue to be responsible with respect to leverage ratios in terms of while looking at our capex decisions and also at the debt level. If in the normal course, we could have afforded a ₹1,400 crore kind of a capex for Indian operations, okay, without too much of impact on debt, maybe another ₹200-300 crore, but at much higher absolute EBITDA level, much higher revenue level is what we would have done in the normal course.

Considering that quarter one looks a little challenging with respect to cash that we would be generating and the margins standpoint, we will try to keep our debt levels, at least in the current quarter, similar to the level at which we ended in the previous three quarters so that an absolute amount of interest remains same, and we will step up our capex and if that means debt level has to little bit go up, we will do so in a normal margin scenario, which we hope will start from quarter two onwards. Therefore, you can assume in your model current level of debt for one more quarter, slightly higher level of debt in the subsequent quarters for the purpose of finance cost assumptions.

With respect to other income, I think it has some component, a little bit of royalty income on Camso part of their operations, which a small amount is there, and some amount is also there with respect to hedging-related income. As we had hedged all our exposures with respect to raw materials and other revenue-related expenses, considering that currency depreciated, there was some kind of a hedging income which is also classified as other income.

I wouldn't say ₹62.5 crore of other income we have reported on a standalone basis as a sustainable number. I think what we had reported in the previous quarter average would be the correct representation of our other income.

The last quarter had more to do with the fact that we had currency-related gains which is taken as other income.

Thank you sir for the clarification, and all the best.

Hi sir. Thanks for taking my question.

Sir, a couple of questions. First, I wanted to check about the inventory days.

For consolidated business it has slightly gone up, if you can just highlight what is driving that, the working capital cycle and the inventory days?

You want response on consolidated or standalone?

Both standalone, consolidated. Consolidated it has gone up that is what I see.

Standalone it's broadly flat.

Standalone was flat. You see, generally our inventory level is the lowest on the 31st of March in general.

Normally March is our best month, okay, and therefore from our standpoint, we generally end the finished goods point of view inventory at the lowest level, and we have been maintaining at around about 24 to 27 days kind of a range is our finished goods inventory in general as far as Indian operations are concerned. Consolidated, we had little higher amount of inventory at Camso as we are taking over operations directly, we have to produce and keep that inventory with us for the purpose of servicing the other geographies, but impact is not much.

I think it's about 1,000 tons in Camso. Raw material inventory was higher as of 31st March.

It was higher a little over ₹200 crore, okay, and it was done as the war was breaking out in the month of March, okay, from supply security point of view, we decided that we will keep some extra physical inventory to make sure all our factories run on all the days, and we were also anticipating some increase in raw material costs or availability of raw material, and therefore we decided to keep inventory in physical form with us. Therefore, about a ₹200 crore kind of a raw material inventory increase that we saw as of 31st March over 31st of December.

Generally, our inventory of raw material is also very similar, anywhere between 24 and 26 days in physical form, including all of that including our work-in-progress in factories and things like that, and maybe a 3-4 days extra inventory was there as of 31st March more as a supply security.

Okay. Sir, on the Camso business, we understand that we will see margin expansion probably from the FY28 majority of it, but what is your expectation for FY27 because we also have a higher commodity inflation and so if you can just help us understand the expectation on the Camso business?

See, I think when we took over business, we did share about the potential of that particular business and our operating level of margins the seller was operating, and we thought we would get some benefit in terms of being part of us closer to our part of the world, okay, and there'll be some synergies and things like that. I think in the beginning of the conversation and also to a question, okay, Arnab shared in terms of what we are doing is that full entire value chain is not with us today, okay, and we expect that entire value chain to be with us in the form of entire control over manufacturing as well as in terms of ability to service the customers from our own warehouses over a 12-month period of the current financial year.

By end of the financial year, I think one part, customers would be serviced by us directly. By beginning of next financial year, we would be mostly likely producing all the products in our own factory, including upstream-related.

That's where we see in terms of our plan. During this interim period, okay, it is proposed to have the infrastructure ready, people ready at different locations, warehousing to do a local servicing, people to take care of sales, and therefore this could be called as a transitionary period, and therefore during this period, we would like to have that flexibility and freedom to operate as it is necessary for the purpose of business.

We'll still stick to the underlying margins based on which we acquired that business, but during this interim period, there could be little bit of a fluctuation. As we go into the current year, we'll keep updating in terms of our own view.

As of now, I think I don't think there's any change over what he has already communicated.

Sir, on the capex side, the ₹1,300 to ₹1,400 crore is for standalone, and additional we expect around ₹50 to ₹100 crore on the Camso upstream business, right? This will entirely come in '27 or part of it will be going into '28?

Okay. We had kept aside $30 million for Camso for the purpose of upstream, particularly mixers, calendars.

I think it won't be ₹100 crore, it will be higher than ₹100 crore. Our estimate is maybe about $25 million could be an outflow, $20 to $25 million as far as Camso goes.

From our standpoint, I think we shared with you ₹1,350 crore to ₹1,400 crore as our requirement for the current year to ensure that we have adequate capacities to meet the demand. In the quarter one, we'll be little careful, okay, and subsequent quarters, if things normalize, that is the kind of capex that we would like to incur during the course of the year.

Okay. Thank you, sir, and all the best.

Thank you very much for your interest in CEAT, and we have come off one very good year and we are entering a turbulent quarter. We'll do our best and see you on the other side of Q1.

Thank you.