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CEAT has announced completion of the CAMSO acquisition effective 1st Sep’25, gaining access to an installed capacity of 250MT/day (split equally between tyres and rubber tracks), with current utilisation levels at ~50%. From 2QFY26, consolidated results will include CAMSO’s integration. CAMSO’s current revenue run-rate is USD 130mn-150mn, though turnover recognised will remain lower over the next 3-4 quarters till direct customer relationships are established. Margins are also expected to remain subdued for 6 quarters until upstream equipment becomes fully operational (targets high-teens to ~20% EBITDA margin by FY28). On the domestic front, the recent GST rationalisation has reduced rates from 28% to 18% for 2W, PV, and truck tyres and from 18% to 5% for tractor tyres; this is expected to improve affordability and boost demand. With its leadership in 2Ws and significant presence in other segments, CEAT is well-positioned to benefit. Accounting for delayed CAMSO revenue / margin recognition, we cut our revenue estimates by 3.9% / 3.6%, translating into EPS reduction by 12% / 8% for FY26 / F27E. We maintain BUY with a Mar’27 TP of INR 3,800 (18x PE).

Acquisition update – CAMSO integration:

• CEAT has completed the acquisition of CAMSO with effect from 1st Sep’25. Through this acquisition, CEAT gains access to 40+ OEMs and 200+ dealers. CAMSO’s installed capacity is 250MT/day (split equally between tyres and rubber tracks), with current utilisation levels at ~50%. The total deal value is USD 225mn, which includes USD 181mn towards assets, future capex, and working capital, and USD 44mn allocated to the CAMSO brand. Of this, USD 138mn has already been paid, with no material outflows expected during FY26. The company has guided for USD 30mn capex towards CAMSO over the next 2 years. From 2QFY26, consolidated results will reflect CAMSO’s integration.
• Financial impact and margin outlook: CAMSO’s current revenue run-rate is USD 130mn– 150mn. However, turnover recognised will remain lower for the next 3–4 quarters due to transition in customer relationships, as CAMSO will initially continue supplying to Michelin till it develops direct customer relations. Margins are also expected to remain subdued for the next 6 quarters until upstream equipment is fully operational. In the medium term, once integration stabilises, CEAT expects CAMSO to deliver normalised turnover with EBITDA margin in the high teens to ~20% by FY28.
• US tariffs: Exports from Sri Lanka to the US attract 20% reciprocal tariffs on both tyres and rubber tracks. CAMSO’s revenue split is balanced at 50% each between tyres and tracks. The management does not foresee a material impact on demand as Sri Lanka remains as competitive as it was pre-tariffs. Over time, it expects the tariff impact to be passed on entirely to customers. CAMSO’s geographical revenue split is dominated by NA (~55%) and EU (35–37%); the balance comes from SA, Australia, and Middle East.
• GST rationalisation: The GST Council has approved significant rate reductions on tyres: 1) from 28% to 18% for 2W, PV, and truck tyres, and 2) from 18% to 5% for tractor tyres. These changes are expected to improve affordability and boost demand. With a leadership position in the 2W segment and significant presence in other segments, CEAT is poised to be one of the key beneficiaries of this rationalisation.

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