CEAT Limited (NSE: CEATLTD) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Arnab Banerjee — Managing Director and Chief Executive Officer
Kumar Subbiah — Chief Financial Officer
Analysts:
Nitin Agrawal — Analyst
Siddhartha Bera — Analyst
Raghunandan NL — Analyst
Mumuksh Mandlesha — Analyst
Rishi Vora — Analyst
Vijay Pandey — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the CSQ4 and full year 26 earnings conference call hosted by JM Financial Institutional securities Limited. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded.
I will now hand the conference over to Mr. Nitin Agrahal from JM Financial Institutional securities Limited for opening remarks. Thank you. And over to you.
Nitin Agrawal — Analyst
Thank you, Ryan Good afternoon everyone. On behalf of JM Financial, I welcome you all to Q4 and full year 26 result conference call of C8 Ltd. From the management side we have Mr. Arnab Banerjee, Managing Director and CEO and Mr. Kumar Subayas, Chief Financial Officer. I would now like to hand over the call to Arnav sir for his opening remarks. Over to you Sir.
Arnab Banerjee — Managing Director and Chief Executive Officer
Good afternoon and welcome to CF Quarter 4 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 and A For the industry, FY26 was a year of two halves while the first six 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 decent turning point with GST rate reduction. This meaningfully reduced the effective tax burden across tariff 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 annually 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 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 high single digit, rising 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 tire demand has been somewhat muted in replacement but may increase in the coming years post an increase in OE sales in the last year in OEM MH series witnessing continued strength post GST rationalization Growth has been robust in Q4 in high double digit light Commercial vehicle growth is also strong in 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 Europe, US and Europe. Passenger car business is also strong particularly in Europe. However geopolitical uncertainties remain key. Monitorable sales to Middle east obviously have been severely impacted in quarter four as inflation. As we are entering a steep inflation zone in quarter one, we will see progression 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% y o y 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 15.5%. Also standalone EBITDA stood at 587 crore significantly crossing the 500 crore milestone and also the 2000 crore milestone in a year. Growth momentum continued in quarter four. 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 tire and passengers category tire in western Europe very well in replacement. 2 Wheeler continues to do well and grew strongly in the mid twenties 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 segment 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 came back very strongly across segments. Passenger car tires in Western Europe US across the markets very strong growth.
Two three wheelers again we ventured into new markets and the base is small so growth looks very impressive. Palm was also pretty good in quarter four so overall 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 PCU about half a percent up in motorcycle, about 1% up.
In scooter it was flattish over quarter on quarter. In trunk bus radial also about half a percent 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 4 margins, gross margins were almost similar to quarter 3, about 19 basis points down.
QQ 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%. So this is a steep increase over a span of three months and the outlook is that we can manage only a small portion of it through cost optimization. So price increase is an imperative. In OEM the price increase comes with a lag, so the first of July we’ll get a big increase. We have got a small single digit increase in quarter one in replacement we have already taken 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 have 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. So 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 2, quarter 3 and quarter 4 as we always try to be.
Our standalone net profit in Q4 was 283crores and 812crores for the full year. As far as Cancer 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 Campso was similar to quarter three down about 5% from quarter three. As you are aware, the Campso business is in transition and will continue to be in transition for at least four more quarters. At the outset we have said four to six quarters and two quarters have gone by end of FY27, the entire value chain may be under our control, but 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. So 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 Qu Waterfall 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 marginal business for us about 130plus new or 5A schemes 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 twenties in quarter four on yoy basis in the high twenties. This was despite the fact that substantial headwinds this year we faced from US tariffs initially and the recent geopolitical unrest in the in the Middle east for premiumization we have been continuously focusing on 17 inch plus sales of passenger vehicle. 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 truckbus radial also we have started premiumizing which we have and we have launched couple of absolutely top of the line premium products which gives a lower TCO to our customers. Digital and AI. Our digital transformation continue to advance in Q 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 bringing core data onto a single governed platform. Alongside the initiation of a 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 Labs and Center of Excellence to anchor innovation and upskill our workforce. Together. This initiative will support a structured and scalable approach to AI adoption across the across the organization US Tariffs in On road tariffs 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 there’s a court order in terms of refunding this tariff so we are following up to see what happens in osg. No such refund etc are applicable to on road tariffs because that was section 232 tariffs which are not reciprocal tariffs. Capex are about 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 crores for our growth capex plus our normal capex we need about 1300 to 1400 crores 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 emission reductions aligned with science bed based Net zero targets focusing on energy efficiency, clean 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 plans also with this certification we achieved S and P Global ESG score of 69 on 100 in 2025 Corporate Sustainability Assessment which places us in the top 4% of companies in ATX 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.
Kumar Subbiah — Chief Financial Officer
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 and A session. So 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 Campso 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 was versus last year come out more clearly to you all.
Our consolidated revenue for the quarter stood at rupees 4219 crores and standalone revenue stood at rupees 4036 crores. Our standalone revenue grew by 18% year on year basis. We would like to inform you that our standalone revenue crossed an important milestone of Rs. 4000 crore in a quarter for the first time. In the preceding quarter our full year consolidated revenue stood at 15,678 crores and the standalone revenue for the year stood at 15,215 crores and a standalone growth was about 15.5% on a full year basis.
Here again, our standalone revenue crossed an important annual milestone of crossing rupees 15,000 crores 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 costs, and also reduction in GST rates on tires from 28 to 18% for most of the tire categories except in case of farm dyers 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% plus 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 toward 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 now coming to EBITDA margins, our consolidated EBITDA for quarter four stood at rupees 598 crores, translating to about 14.2% in margin percentage terms and our standalone EBITDA stood at rupees 587 crores. 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 Rupees20.63 crores translating to 13.2% margin. Our standalone EBITDA stood at 2042 crores which is a 214 basis points improvement versus FY25. This marks a significant moment for us as our continued effort and prudence purple has passed rupees 2000 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 continued 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 remain subdued at around thousand seven hundred dollars in the previous quarter. However in the current quarter it started with $800 level and gradually now hovering around 2050 to $2000 per tonne.
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 rupees 190 rupees per kilogram level in the beginning of quarter four to around 245 rupees per kilogram as we speak now. Rupee has remained volatile and further depreciation in quarter four from around 90 rupees to 91 rupees to a dollar to around 94 to a dollar now would also have additional impact on our costs going into quarter one.
During quarter four our raw materials were broadly in line with quarter three. As I mentioned earlier we benefited from lower cost inventory during quarter four. The full impact of the recent increase in raw material cost will materialize in quarter one of the current financial year which we will try to managed 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 risk premiums and physical supply constraints requires 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 planned capacity utilization are levels are high at 90% plus level we stepped up our capex in quarter four to 407 crores for the quarter higher than around 200 to 250 crores of flow in the previous quarters. Overall our capex was about 1076 crores in the year FY26. The capex was higher in quarter four was to ensure that our capacity additions happened in line with our demand in the current year as utilization levels are high.
In addition, we also had an outlay of about 236 crores in quarter two towards acquisition of intangibles. With respect to CAMSO on a standalone basis, the working capital increased by about 108 crores as compared to quarter three. On a full year basis the operating working capital moved from -31 crores in the beginning of the year to 108 crores and increase of 139 crores. This is mainly on account of accumulation of some GST credit balances in two of our states to a tune of about 120 crores 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 are taking necessary support steps to ensure that we get back to negative working capital zone soon.
Our consolidated debt stood at 3,011 crores and standalone debt stood at 2,961 crores, 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 and debt to equities. Our balance sheet is strong enough to provide and continue to provide growth capital to the business. Coming to operational expenses operating our stand alone employee cost declined marginally in quarter four compared to previous quarter and consolidated increased by about 18 crores largely attributable to additional manpower hiring that happened at Campso 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 on absolute basis as it decreased by about 34 crores sequentially due to lower outsourcing and other operating expenses. Overall, we kept tight control on costs 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 crores largely on account of lower interest on security deposit and also on account of average debt level being Lower in Quarter 4. Overall profitability. Overall consolidated profit for the quarter stood at 243.8 crores which compares favorably with rupees 98.7 crores during the same quarter of last year and rupees 155.4 crores in the previous quarter. A standalone profit for the year for the quarter stood at 283.6 crores. Again compares favorably with rupees 100.4 crores that we reported during the same period of previous year and rupees 191.6 crores that we reported in quarter three.
Our quarter four profit after tax included amount after adjusting an amount of rupees 10 crores of exceptional item towards voluntary retirement scheme option provided to employees in one of our factories. Overall, the company reported a profit after tax on a full year basis. Rupees 812.72 crores on a standalone basis and Rupees 697.24 crores on consolidated basis translating to an EPS of 201.17 per share on a standalone basis and Rupees 172.78 on a consolidated basis respectively. We are 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 rupees 35 rupees 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 and A.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Siddhartha Bera from Nomura. Please go ahead.
Siddhartha Bera
Yeah, thanks for the opportunity, sir. So, first question is on the commodity side. So you mentioned a 15% rn cost increase in the first quarter possible to highlight. I mean that. Does that fully reflect the current RM which you said about rubber being at 250 and crude being at 110? Or what level does it represent? And if we look at the current commodity prices, how much more do you think can happen on the cost side for our basket? Maybe in the next one or two quarters?
Kumar Subbiah
Okay, now first of all would like to clarify, that situation is dynamic. Okay. Just now we mentioned crude is 107. If we have had this call a week back, we would have also said crude is 95. So therefore it’s a dynamic situation. Considering we buy raw materials or cover ourselves on an average over a period of next three months, including imports, our visibility with respect to our current quarter is generally is reasonable. So based on inventory that we are carrying and including both raw materials and finished goods, plus the raw materials that we have ordered, we feel that raw material cost increase in quarter one could be to the unit of 15%.
But if you were to take a replacement cost of raw materials today, the number could be little higher than 15%. But I think we should wait and watch beyond quarter one in terms of what impact would it have. But it entirely depends on how things unfold during the balance part of the current quarter for us to get a visibility of quarter two.
Siddhartha Bera
Understood, sir. And on the price increase, if you can also talk about till now, what has been the cumulative price increase maybe in till June you look to take, I mean you talked about 5% or mid single digit till April and another 5% by June. So that 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.
Arnab Banerjee
So we need to take overall 10% vis a vis March out of that 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 could be. It is also dependent on how the competitive situation plays out, how the demand plays out. So we need to take another 5% and we intend to take another 5%. So that’s what is being said in a staggered manner through May and June. In OEM it is index.
So we have got one index price hike which is low single digit kind of price hike. This is the index in on 1st of April, on 1st of July we will get a heavier price hike hopefully based on the index. So there will be a lag. And 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. So it will not again be a single. I think we have already taken 3, 3 to 5% in international.
Another 5% announcement is being made in a maybe one or two weeks time. So it Will gradually pass through over. Over the till 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. So that’s the plan.
Siddhartha Bera
Understood, sir. The second question is on camso. I mean we have seen the. Probably some of the execution getting stretched out. If you can give us some color in terms of the revenue ramp up. I mean we earlier expected maybe second half. We do see a stronger pickup as we would have been operating now for around a year. So 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 cancer? And 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?
Arnab Banerjee
Yeah. So the Canso business is with us right now in transition phase. So let me just refresh. What is the transition phase? In transition phase we sell the goods to Michelin and not to our customers. And Michelin sales team is selling it to the customer. So about 25 to 30% margin of the overall value chain is sitting there. Then at the 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 equipments of mixer and calendar.
This will take. I am first talking about the back end. This will take at least six quarters, four to six. We have been saying so which means we took it took over the business in September 25th. We will be able to complete this job by March 27th. So that is roughly about six quarters and 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, 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. More recruitments are still being made. So that is a time when we can look at interacting with our customers in aftermarket and OEM and picking 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 on to the new vehicles of the OEM.
So it will be slightly later maybe in FY28, the growth of OEMs will start coming. But 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 and D guys also.
So 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. And finally at the end of this year, FY26, when the equipments are also established in the factory, we’ll gain that part of the value chain also. So to turnover will start increasing in second half of this year. Margin will start getting impacted by FY28.
Siddhartha Bera
Got it sir. I’ll come back in that.
Operator
Thank you. We take the next question from the line of Raghu Nandan from Nuama Institutional Equities. Please go ahead.
Raghunandan NL
Good evening team. Thank you so much for the opportunity. A few clarifications. Firstly for key Q4, FY26 standalone. Sir, can you please share the volume growth YY and also the growth for OEM replacement and exports?
Arnab Banerjee
Volume growth is close to volume growth. YOY is close to 20% overall. Right. Quarter four to quarter four. And the growth across the segments have been. Have been pretty much uniform. Little higher in international business. Mid 20s and it is about, you know, mid teens to 20s for replacement and OEM.
Raghunandan NL
Got it. Thank you. And second on cancer, would the US tariffs now be at that same rate of 10% or could there be a different tariff?
Arnab Banerjee
No, it will be. The tariff will be at 10% and the metals part of tracks, which is, which is a little metal clip that goes on the under surface of the track that will be tariffed at 50%, 25%
Raghunandan NL
Notice, sir. Thank you for that. But the tracks would be what percentage of revenue, sir, for cancer within US
Arnab Banerjee
Tracks, TRAX is roughly 50%.
Raghunandan NL
Noted, sir. Got it. And in terms of export markets, how much would be our Middle east exposure? Would you expect that to be a overhang for growth in FY27 or would you expect double digit growth to continue for 27?
Arnab Banerjee
Yeah, so Middle east is about 59% for us. So that will be little uncertain. It was practically zero in quarter four. And then towards the end of quarter four it’s also. It may not be zero. But it won’t be 15%. But as I mentioned, our international business basket is widely diversified towards Southeast Asia, Europe, US and also latam. And if you look at the global potential, we are a very small player in that perspective. So we have tremendous potential for growth. If we had Middle east, the growth would have been higher.
But I think we will be able to make up Middle east like we did in quarter four. Quarter one outlook order base wise looks good after completely disruptive counting Middle East. So whatever comes from Middle east will be a bonus.
Raghunandan NL
Noted sir. That’s good to hear. And for FY27, what would be the total console CAPEX expected, sir.
Kumar Subbiah
Okay, now see console cap India. Overall I’m excluding Campsu, our CapEx would be about 25% more than what we had incurred last year, which is about 1076 was our last year. So it should be in the range of 1350-1400 crores 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. And as far as CAMPSO operations are concerned, I think we had shared it in the past and just now 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 three fourths of that we would be spending in the current year in terms of cash flow in that range. So that will be in addition to this number and the number relating to upstream as part of our CAPEX estimate in the business case itself.
Raghunandan NL
Noted sir. This is very helpful. Just the 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
Arnab Banerjee
So 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.
Raghunandan NL
Noted sir. Thank you so much. I’ll fall back to the team.
Operator
Thank you. We take the next question from the line of Mumakesh Manlesha from Anandrati Institutional Equities Please go ahead.
Mumuksh Mandlesha
Yeah, thank you sir for the opportunity. So generally retrieval market we’ve seen past grow in the single digit high single digit. In Q3 we had the postponement demand from Q3 in Q4, Q4 also we sustained very strong demand. Is it partly sir, due to some reason like because there was price expected in Q1, so there was some preponement of demand or generally you saw better demand gst?
Arnab Banerjee
No, that I can answer categorically. There was no impact of expected price hike in quarter one on quarter four sales and quarter even March and price hike was not like 5%. It has been staggered through the month of March and April, the entire 5% that I talked about. So it is the GST decreased year last 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. So it’s a secular demand increase and not something which is particularly fixed on a certain geography market combination. So it is because of that momentum.
Mumuksh Mandlesha
Got it. And so now in the human in April with the war environment and and with kind of price hikes happening, sir, I mean did you see any change in the pattern? Is it become more softer now, sir?
Arnab Banerjee
So quarter one usually is a good quarter in terms of consumption of tires, especially in the commercial segment. And then by end of quarter one with the onset of monsoons, the passenger segments also pick up. So generally it is a good quarter demand wise. So the momentum of Q3 Q4 continues into quarter one exactly like it was. So 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.
So the full impact of price increase has not yet been experienced by the market as it experiences 5 to 10, 10% price hike through quarter one. We expect some moderation of demand.
Mumuksh Mandlesha
Got it. So great to hear. The demand continues. So just on the camzo side because with the low duty sir, in the end market are you seeing a better demand trend? And also just want to understand how this raw material inflation impacts the camps of margin sir, how that pass through would happen and anything on the fleet cost increase there also
Arnab Banerjee
Freight cost increases two to three times in several markets. Normally that is recovered through a freight surcharge which we are doing across categories. The lower demand, the lower taxes resulting in higher demand in US market is not very much evident to us because we are not handling the customers directly as I mentioned. So Once we start start handling the customer interface directly, I think we’ll be able to leverage such changes much better. So right now it is not very much apparent.
Mumuksh Mandlesha
Right. And just on this RN inflation for Tamzo, how would the margins would be passed through? Sir, so
Arnab Banerjee
That, 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.
Mumuksh Mandlesha
Got it.
Arnab Banerjee
On both sides because we buy compound from them, we also sell them the finished goods on both sides. Adjustments happen.
Mumuksh Mandlesha
Understood? Understood. Thank you so so much. Thank you.
Operator
Thank you. We take the next question from the line of Rishi Vora from Kotak Securities. Please go ahead.
Rishi Vora
Yeah, thank you for the opportunity just to follow up on the pricing scenario in the industry. Right. And particularly you know, just talking about the leader MRF, you know least so far what I have picked up is they have taken select segment of Isaacs in LCV and maybe farm segment but nothing much have been taken in two wheeler, PCR and CV segment. So 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 you know we’ll also rethink our strategy on pricing because at least on the two wheeler side, you know they are the, let’s say two wheeler and you know, series they are the like top layer. Right. So what’s our thought on this?
Arnab Banerjee
So a couple of corrections. MRF has taken price increase 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.
Rishi Vora
Okay, understood. So and, and what would be the quantum of that?
Operator
Ladies and gentlemen, we have lost the line of the management. Please stay connected while I reconnect the management. Thank you. Ladies and gentlemen, thank you for your patience. We have the management line reconnected. Rishi, if you could please repeat your question. Thank you.
Rishi Vora
Just sir, on the MRF question, sir, do by any chance, do you have idea what quantum of price increases they have taken so far?
Arnab Banerjee
About I think three, three and a half percent. They have taken roughly, I don’t recall category wise, but that’s a good estimate.
Rishi Vora
Understood. Secondly, just you know, let’s say, just thinking about demand from, let’s say beyond first half, you know, if we take a 10%, if you are able to take a 10% price increase and especially in the CV segment which is relatively more price sensitive now how should we think about Demand because second half the base will also become pretty high for us. Given that for second 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.
Arnab Banerjee
So on the replacement side the reduction of GST is. Is the tailwind definitely towards in all categories. Number one. Number two, the vehicle park is increasing significantly because of higher sales of OE vehicles. Right. And in. In. In the truck bus segment, as you would appreciate the replacement, the life cycle of the tyre is much shorter unlike the passenger segment. So if the overall goods movement which is again dependent on the GT GDP growth is overall goods segment is not impacted too much.
If there is the fuel prices price hike is moderate. So there are many things that are involved. Right. So if the trucks are plying, if the rates are holding the remuneration rate for the truckers, they will replace tires. So we expect moderation in demand. But it’s not like we don’t expect a degrowth in price bus radial tire even after a 10 price hike. But definitely it will slow down.
Rishi Vora
What explains such a strong growth in second operative? If GST is the trigger where there is a 10% reduction in prices. And effectively now we’ll be reversing the GST cartridge with the price hike. So you know, 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. So you know what explains this and if the price increases do happen then shouldn’t kind of demand or normalize Back to the 5, 6% levels?
Arnab Banerjee
You’re right. So 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 tire sales. So. So the vehicle. So I won’t repeat my answer. I think you understand.
Rishi Vora
Sorry sir, I was talking only about replacement, not OEMs.
Arnab Banerjee
Yeah, so okay, so replacement demand will be in single digit in truck the truck bus radiance. So 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. But it all depends on how fuel prices behave, how the overall GDP sentiment moves. If There is a demand for movement of trucks. Tires will need replacement and tires will be replaced. The demand will come down but it won’t turn into negative territory. That’s what I was trying to say.
Rishi Vora
Understood. And sir, any comments on how the growth should look for PCR and two wheeler replacement like in the second half and beyond? Yeah.
Arnab Banerjee
So PCR as you are aware was not great even in last year the market grew by hardly 1 to 2% in replacement. Right. But again vehicle park is coming in. But here the replacement cycles are long so we expect a gradual improvement in PCR. Not like PCR going it 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 especially in the scooter segment, the scooterization, the EV and it’s supported by growth in both urban and rural markets. So 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, across this year as well. That’s the expectation in replacement.
Rishi Vora
Thank you sir. And just last thing on finance cost and other income. Right, finance cost. How should we think about going into FY27 with like it’s a 3,000 crore debt and you know, 89 is the interest cost, 78% is how we should think about the annualized finance cost and what drove the sharp increase in other income this quarter.
Kumar Subbiah
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, you know, banking related expenses. Our debt level more or less remained around 3,000 crores for the last three quarters. September we were close to about little over 2,900 crores. December also similar levels and March also I’m talking about standalone consolidated
Rishi Vora
Also not very
Kumar Subbiah
Different from that standpoint. So that is one of the reasons. So going into the next year of course you have to generate enough cash to sustain debt level. If you have to manage our CAPEX program as we have just outlined and we will continue to be responsible with respect
Rishi Vora
To leverage ratios in terms of, you know,
Kumar Subbiah
While looking at our CAPEX decisions and also at debt level in the normal course we could have afforded a 1400 crores kind of capex and for Indian operations, okay, without too much of impact on debt, maybe another 200, 300 crores 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 will 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 entered in the previous three quarters.
So the absolute amount of interest remains same and we will step up our capex. And if that means, you know, 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. So therefore you can assume 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. Okay. And with respect to other income, I think it has some component, A little bit of a royalty income on on Campso part of the operations which a small amount is there and Some amount is also there with respect to, you know, hedging related income.
Okay. As we had exposed, we hedged all our exposures with respect to raw materials and other revenue related expenses. Considering you know, currency depreciated, there was some kind of a hedging income which is also classified as other income. I wouldn’t say 62.5 crores of other income we have reported and other on a stand alone basis is a sustainable number. I think what we had reported in the previous quarter average would be the correct representation of our other income. Last quarter had more to do with the fact that We had currency related gains which is taken as other income.
Rishi Vora
Thank you sir for the clarification and all the best.
Operator
Thank you. We take the next question from the line of Vijay Pandey from Access Capital. Please go ahead.
Vijay Pandey
Hi sir. Thank you for taking my question. A couple of questions. First I wanted to check about the inventory days. So for consolidated business it has slightly grown up. So if you can just highlight what is driving that the working capital cycle and the inventory days.
Kumar Subbiah
You want to respond on consolidated or a standalone?
Vijay Pandey
Both of standalone. Consolidated. Consolidated. It has gone up. That is what I see. I think in a standalone it’s broadly flat.
Kumar Subbiah
Yeah, standalone is flat. You see generally our inventory level is the lowest on the 31st of March in general. Okay. And normally March is our best month. Okay. And the. 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 Campso.
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 the impact is not much. I think it’s about 1,000 trust. In Campso, raw material inventory was higher as of 31st March. It was higher. Little over 200 crores and it was done. The war was breaking out in the month of March. 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 cost or availability of raw material. And therefore we decided to keep inventory in physical form with this and therefore about a 200 crores kind of a raw material inventory increase that we saw as of 31st March over 30 31st of December. Generally our inventory of raw material is also very similar. Anywhere between, you know, 24 and 26 days in physical form, including all of that, including our, you know, work in progress in factories and things like that.
And maybe three, four days extra inventory was there as of the 31st March, more as a supply security.
Vijay Pandey
Okay, sir. On the cancer business. So I 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 terms of the news.
Kumar Subbiah
See, I think when we took our business we did share about the potential of that particular business. And at 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. There will be some synergies and things like that I think in the beginning of the conversation and also to a question. Okay, I’ll arnab shared. In terms of what we are doing is that entire value chain is not with us today. And we expect an entire value chain to be with 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 the next financial year we would be most likely producing all the products in our own factory, including upstream related. That’s where we see in terms of our plan. And during this interim period it is proposed to have the infrastructure ready, people ready and different locations warehousing to do a Local servicing people to take care of sales. And therefore this could be called as a transaction transitionary period.
And therefore during the period we would like to have that flexibility and freedom to operate as it is necessary for the purpose of business. We still stick to the underlying margins based on which we acquired that business during the inter 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
Vijay Pandey
On the capex side. So the 1300-1400 crores is for standalone and additional. We expect around like around 50 to 100 crores on the terms of upstream business. Right. This will be entirely coming 20 sign out. Part of it will go in also.
Kumar Subbiah
Okay. No, we had kept aside $30 million for camp. So for the purpose of upstream, particularly mixers calendars, I think it won’t be 100 crores, it will be higher than 100 crores. Our estimate is maybe about $25 million. Could be an outflow 20 to $25 million. As far as campso boost from our standpoint, I think we, we shared with you 1350 crores to 1400 crores as our requirement for the current year to ensure that we have adequate capacities to meet the demand in quarter one. We will 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.
Vijay Pandey
Okay, thank you sir.
Operator
Thank you. Ladies and gentlemen. If you wish to ask a question, please press star and 1. As there are no further questions from the participants, I now have the conference over to the management for their closing remarks.
Arnab Banerjee
Thank you very much for your interest in CET. And we have come off one very good good year and we are entering a turbulent quarter so we’ll do our best and see you on the other side of Q1. Thank you.
Operator
Thank you on behalf of JM Financial Institutional securities Ltd. That concludes this conference call. Thank you for joining us. And you may now disconnect your line.