Expect Double-Digit Growth in FY26, Rural Replacement Market to Continue to Drive Sales: CEAT

Tyre maker CEAT Ltd expects to maintain a double-digit growth this fiscal with domestic replacement segment, specially from rural markets, to drive sales while direct supplies to automobile makers are likely to be muted, according to company MD & CEO Arnab Banerjee.

The company is also waiting and watching the tariff situation in the US, a big growth market but not a significant one right now for it, to decide its future course of expansion in the country, he told PTI.

"We have started with a double-digit growth in Q1, which we have maintained last year also. We expect to maintain or accelerate that over the next two to three quarters," he said when asked for the outlook of the remainder of the fiscal.

In the first quarter ended June 30, 2025 the company's revenue stood at Rs 3,529.4 crore, up 10.5 per cent year-on-year.

As for the growth drivers, Banerjee said the two-wheeler replacement segment in the rural market is expected to do well across segments.

"On the replacement side, rural demand should be good because monsoons have been good. So we expect rural demand to be robust. Then adoption of electric vehicles specially scooters etc is going strong," he said.

Banerjee further said, "There will be some demand softness in the passenger cars side, which is dependent on larger towns but we are seeing a big shift there also from smaller size tyres to larger size tyres. Value growth could be there, margin growth could be there. In terms of the number of tyres, growth may not be that robust." Truck and bus radial tyres in the commercial vehicles segment will continue "to do decent", he noted.

However, on the direct supplies to automakers, he said, "OEM growth in two-wheelers has slowed down and passenger vehicle is low single digit. It is going to continue like that unless there are some big launches which create excitement in the market." Medium and heavy commercial vehicles (M&HCV) could also slow down once the pre-buying before AC cabin regulation comes in (from October 1 this year), he said, adding "it may slow down a little bit. So, on the OEM side, slowdown is expected".

When asked about the impact of Trump tariff uncertainty, Banerjee said, "The impact on our international business is low because our stakes are low in the US. Materially it is not significant but it is a big growth market for us." The US market accounts for about 3 per cent of the company's total sales.

"We are waiting and watching...," he said, adding CEAT would wait for the tariff situation to settle down to plan its future growth strategy in the US.

Asked if the company would look at local manufacturing in the US, he said, "We have not thought that far as yet but we are just waiting for the tariff situation (to settle down) and how the pricing will move in the US." Noting that there will be inflation on imported tyres, Banerjee said the US is hugely dependent on imported tyre, not only from India but from various countries.

About the European market, he said Q1 was not good as distributors and channels were not stocking due to global geopolitical uncertainty.

"However, for Q2 we have good order visibility, more of a seasonal offtake...Q2 order base is very good. Seasonal offtake is very good and if we execute it well, it will be good and from there we will see what happens in Q3 and Q4," Banerjee noted.