CEAT shares fell sharply on Friday, dropping 9.3% to trade at ₹3,550.40 on the National Stock Exchange after the tyre manufacturer reported a steep decline in first-quarter profits.
The sell-off was driven by a severe margin squeeze that erased the benefit of strong top-line growth, with raw material inflation and rising finance costs identified as the primary headwinds.
CEAT had previously reported a 22% year-on-year increase in revenue for the first quarter of fiscal 2027, but that top-line expansion was entirely negated by contracting operating margins.
The stock touched an intraday low of ₹3,471.10, marking a significant departure from the previous close of ₹3,829.60.
Investors penalized the company for its inability to pass on input cost increases to customers, a recurring challenge in the tyre sector where rubber and carbon black prices have remained volatile.
The divergence between revenue and earnings highlighted the fragility of the company's current pricing power.
CEAT had previously reported a 22% year-on-year increase in revenue for the first quarter of fiscal 2027, but that top-line expansion was entirely negated by contracting operating margins.