The Board of Directors of CEAT, an RPG Group company and one of India's leading tyre manufacturers, on 17th July unanimously approved a proposed capital expenditure of approximately Rs. 4.5 billion (US$52 million) for its Chennai plant, located in Kancheepuram, Tamil Nadu.

This investment is intended to increase the plant's Passenger Car and Utility Vehicle (PCUV) tyre production capacity by approximately 35% of its current level. The decision follows CEAT's expectation of strong medium-term growth in the PCUV segment.

"This investment is intended to add capacity progressively, to service the anticipated future demand," the company stated in a regulatory filing. The Chennai plant currently operates with an annual capacity of approximately 7 million tyres and is utilising about 80% of this capacity. The expansion is expected to be completed by the end of FY 2027.

Funding for the capital expenditure will be sourced through a combination of internal accruals and debt.

This development comes as CEAT anticipates double-digit growth in FY 2026 and has allocated capital expenditure in the range of Rs. 9-10 billion, primarily for expanding its capacities in the passenger car tyre and truck/bus radial tyre segments. The company had incurred a capital expenditure of approximately Rs. 9.46 billion during the previous fiscal year.

According to a research report by a market research firm, the size of the Indian tyre market reached 202.2 million units in 2024.

The report projects the market to reach 263.8 million units by 2033, reflecting a compound annual growth rate (CAGR) of 2.85% during the period 2025-2033. The market is witnessing steady growth, driven by rising vehicle production and increased demand for replacement tyres.

CEAT reported a net profit of Rs. 1.123 billion for the first quarter of FY 2026, representing a 27.2% decline from Rs. 1.542 billion in Q1 FY 2025.

Despite the decrease in profitability, the company recorded a 10.5% year-on-year increase in consolidated revenue, which rose to Rs. 35.294 billion for the quarter ended 30th June 2025. The EBITDA margin stood at 10.9%.

On a standalone basis, CEAT posted a net profit of Rs. 1.354 billion in Q1 FY 2026, a decrease of 9.2% from Rs. 1.492 billion in the corresponding quarter of the previous year.

Revenue increased by 11.1% year-on-year to Rs. 3.52 billion, while the reported EBITDA margin was 11.1%.