Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Our first question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead.

Couple of clarifications, f irst, one you mentioned Na gpur 2-Wheeler capacity expansion is 20,000 per day. Is that correct?

Yes.

And secondly exports?

I just want to clarify; Arnab had mentioned it is an enabling approval that we have taken.

And secondly, we mentioned that exports are 19%, but we expect that to go to 26% in FY26 because of US ramp up, is that understanding also, correct?

Secondly, with respect to the underlying demand, we are continuing to see a fairly good traction on the replacement side, any red flag which you are seeing on the replacement demand side, given that some of the OEM side growth is moderating, any red flags on the replacement, which you are looking at from FY26 perspective?

The passenger side demand is modest. I must say in replacement, which is as I mentioned mid- single digits and the OEM growth also had been modest this year. But then last year, OEM growth has been good. So, the base is high, the vehicle part is high. So, we will have to wait and see how the demand goes in the replacement for passenger . For 2-Wheeler, demand is very robust, especially in scooter, also in motorcycle and it is particularly robust in less than 50,000 towns. For MHCV, it is as usual in mid-single to high single digits which is pretty good actually and we expect that to continue.

And the last question is with respect to our exports, so what percentage of our exports would be coming from the US now?

Percentage is difficult to mention. Europe will be highest for us, Europe and Latin America would be higher than US at this point of time. Even the Middle East is high. The US will become a big market for us in the next 2 years’ time, with OHT leading the way and now truck bus radials and finally passenger car radials, it is not very high at present.

And do you see any benefit of this tariffs which are being threatening to put on Chinese imports, given that China probably would have much higher share of t yre imported in US, so do you expect to benefit some of these tariffs actually come through?

We will have to wait and see because the Chinese manufacturers have also moved to newer and newer locations. You must have read about a new plant coming up in Cambodia recently, then in Mexico, right, so that continue, the competition will remain in some form or the other from different geographies, from Chinese manufacturers. So, we don't expect too much of a change for the US market in the near future.

Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead.

Sir, if I am correct, you mentioned that the overall volume growth has been 7.9% in the quarter?

Yes, Quarter 3.

So, if I use that, it seems that the ASP increased sequentially has been largely flattish and this is despite a lot of price increases we have done across segments in the Quarter 3, so if you can just help us understand is it because of mix or anything else, why the ASPs are flattish?

You are referring to Quarter 3 versus Quarter 2, is it?

No, Quarter 3 to Quarter 4, overall realization moved up by about 1.5%-1.6% realization per kg at aggregate level. So, in quarter-on-quarter has that additional 1 %-1.5% growth in the price . See the revenue number operating income includes non-sale amount little bit. So, any moment there may not allow you to understand exactly, but please in your understanding assume that there was 1.5% growth in price overall at aggregate level. Obviously, the percentage varied depending on the category and segment, but at aggregate level 1.5% growth was there in price.

And towards the quarter end, what was the amount of price hike we have taken 2-Wheelers and how much increase do you expect at an overall level to further take place in the current quarter?

It is a very small nominal increase because you would understand that there has been no increase, I think for at least 3-4 quarters now in 2-Wheelers and 3-Wheeler. The market has been robust, so we had focused on growth. So, it is a very nominal increase of around 1% and it will be in small steps, but there will be multiple steps through Quarter 4 and maybe in Quarter 1 on 2- Wheeler and 3-Wheelers as well as opportunities in other categories.

Sir, basically 2 questions there, why despite a very strong demand in 2-Wheelers, we have not sort of been able to take up the prices? Is it because of competition or anything else which is sort of dealing with passengers? And second is, how much price increase do you think you will need more to probably go back to our targeted margin levels given that commodities are sort of flattening out and we probably won't see a very meaningful drop in the coming quarters?

Yes, it is because of the competitive situation and the growth has been most robust here. So, that is the relieving point and with commodity prices flattening out, it is actually easier to plan for a price hike than when it is going up. That is point number 2. Point number 3 is that 2-Wheelers and 3-Wheelers have a higher proportion of synthetic rubber. So, to that way, to that extent, the super hike of natural rubber was less impactful on 2-Wheeler and 3-Wheelers, but we have a gap to fulfill there, so that is why we are now intending to take it up in small steps. So, there may be 5-6 steps also to make up the pricing gap.

And sir, lastly, with this export push from the current segment, do you see generally if I look at the segments, export should be more profitable and now with the current depreciating as well, do you think there can be a lot of support that can come from the export markets as well?

Yes, so export, those 3 focus areas of EU, US and Latin , there is headwind in Latin, but US is now going to grow because we have geared up in at least two segments which are OHT and TBR with passenger going to come in FY26. Europe has started doing very well and at a very good margin in all these three focus areas of OHT , in aftermarket and truck bus radial has started moving up and passenger, we have done very well in Europe as well in Quarter 3. So, out of this three, two are definitely firing and other area we are also doing fine. So, our order book is good, so we definitely would like to grow at double digit. We have grown in double digit in Q3. We will continue to grow in double digit in Q4 and thereafter in exports, which is margin accretive as you said.

Thank you. The next question is from the line of Raghunandan from Nuvama Research. Please go ahead.

Sir, can you share the utilization level currently in TBR, PCR and 2-Wheeler?

TBR, Halol plant is fully utilized, and Chennai is ramping up, so it is very difficult to measure the utilization, but we are selling whatever we are producing by and large. The utilization in TBR is very high. In 2-Wheeler, which is our Nagpur plant, again utilization would be 90% kind of levels at this point of time, which is why we took an enabling approval from the board for expanding Nagpur. And passenger again, Chennai is scaling up, so we have very high utilization at Halol almost 90%-95% and Chennai is again difficult to measure because it is in the ramp up phase, but pretty high utilization, but we have a runway in front of us at Chennai.

So, at Chennai, you would still have space for further brownfield expansion and fair to assume, just wanted to reiterate your stance that next 2-3 years, all the expansion will remain brownfield?

Next 2 -3 years , Chennai, t here is lot of space, you a re correct, and we will continue to incrementally expand Chennai, and we have now taken an enabling resolution on Nagpur. So, we will go incremental in Nagpur also, we will keep on expanding it. And TBR, of course is in expansion phase, so yes, most of it will be brownfield. OHT at Ambernath is also brownfield , so in fact, all of it will be brownfield.

And what would be the broad CAPEX for FY26? Would it be in the same range, Rs. 1,000-Rs. 1,100 crores?

No, see, we are in the midst of our annual planning exercise now. So, as far as the current year is concerned, I think we have clear visibility to the Rs. 1,050 crores kind of a CAPEX. Maybe we will share an update once we complete our annual planning, which has a long -term demand plan, long-term supply plan and next year's plan etc. So, we will share that maybe in the next quarterly call.

And also, in terms of US market potential and assuming that over the next two years you are saying that it will become reasonably high sized portion of our exports, if you can talk a bit more on when the new products are getting introduced in the PCR space, what kind of markets you are targeting and possibly in the next 2 -3 years, would you expect US to be 20%-30% of your exports?

Yes, US, if you are looking at the product market fit, US is a completely different market from Europe, which is again completely different from India. So, our toolkit is the same. Study the local market, gather insights, not only about the product but about consumer usage, which we did for OTR, for TBR and for PCR. And if you are saying 20 %-25%, it is possible, it is not impossible to reach that kind of figure in the international business basket. Europe as a geography considering all kind of products is nearing 10% of our entire turnover, it is still single digit. So, that is the biggest area, which is growing, and US is very small now, but that is the aspiration. You are right. And the product platforms in passenger , you mentioned passenger particularly, I think 10%-20% similar to Europe, but the product platform and the performance characteristics are different. So, we have developed the full range accordingly and we will ensue on our GTM in passenger in the next financial year, FY26.

Just a last question , on YTD basis, how has our market share been in 2-Wheeler, PCR, TBR versus last year?

TBR, there has been a steady gain, but it is very consolidated market with the top 3 players occupying a large chunk of the market. So, we are playing in balance, but we are gaining share. We are close to maybe double digit, but still in single digit , there has been a gain. Passenger is mostly steady with plus minus 0.2% up and down over the quarters. So, that is how the market share has been in the place.

Thank you. The next question is from the line of Joseph George from IIFL. Please go ahead.

I have two questions, one is in relation to price hikes, so what I wanted to understand was of all the price hikes that have taken in the third quarter, how much is reflected in the third quarter results and how much would be the flow through into 4Q, so for example, if you hi ke price at the end of the quarter, the entire flow through will happen 4Q, if you can just quantify that?

Well, I think. I don't recall if the exact month, but roughly 50% would have been reflected in Quarter 3 and would flow through into Quarter 4 and then there will be further price hikes in Quarter 4.

So, would like 100 bps or something flow into 4Q based on the prices that you have already taken?

Little less than that.

The second question I had in relation to the interest expense. So, for the quarter, I noticed that it spike to about Rs. 75 crores and you mentioned that average debt was higher, but closing debt was lower, but if I do a simple math which is for Rs. 75 crores for the quarter, if I annualized that, it goes up to about Rs. 300 crores, your closing debt was less than Rs. 2,000 crores. If I do a simple math there, 300 divided 2000 works to interest cost of about 15%. Even if I assume that the average debt in the quarter was 10% higher say Rs. 2,200 even then it works up to 13 .5%. So, these numbers are mind boggling. So, I want to understand what exactly the cost of debt at this point and what is the direction of that number?

No, the finance cost that you see , interest is one of the components in debt. There are also banking-related cost, which is in that number, but not very significant. See in addition to the debt, we also have some security deposits that we have received from our dealer channel. And there is corresponding receivables also there in the current assets. So, the deposits that we get from dealers also carry some interest, so that interest needs to be, that is also part of this finance cost.

Debt that is there on the books, I am not referring to the deposits from the distributors, etc., but for the debt on the books, what is the average cost of debt?

Yes, see, it is closer to about 8%, mix of both long term and short term

Thank you. The next question is from the line of Kaushik Pod dar from KB Capital Market. Please go ahead.

This Camso acquisition, will it be funded by debt or fresh equity?

No Camso, it will be a mix of both. Needless to say, this is fungible with debt or internal accruals, and so far in the last 3 years, most part of the CAPEX we funded through our own internal accruals, so we have enough amount of even CAPEX. During the quarter also, as I mentioned, Rs. 283 crores of CAPEX was entirely funded through internal accruals only. So, theoretically, we always assume whenever we carry out an exercise, one-third would be equity and two-thirds would be bps for the purpose of evaluation of proposals and reality last 5 -6 years, if we really look at it where we have spent close to about Rs. 5,000 crores, less than one-third of that got funded through debt and more than 80% got funded through internal accruals, so it will be a mix of both, cash generated from the operations depending on wherever it is required, the operating cash flow would be deployed and with this, assuming it is 225 million overall, and some amount we will pay little later. And over a one-year period or 18-month period, only two-thirds of that amount incrementally will remain as a debt and one-third by the end of the cycle it would be done through internal accruals.

And as things stand today and as you foresee a little bit into the future, realistically when can we get back to that 14% EBITDA margin?

No, see, in a 4–5-year cycle, we always have 1 to 1.5 years where the commodity prices move very fast. In our industry, when commodity prices significantly increase within a short period of time is when margins go to the lower end of the range, which let us assume in 10%-15%, let us assume, it is towards the lower end of the range which has happened like rubber from Rs. 150 per kg to 2-1/2 quarters back touched Rs. 250 in Indian market. And similarly crude also has this tendency of suddenly moving up from $70-$100, $110 and it stays there for a period of time . Very rarely, we had occasions where commodities went down by 30%-40% at a short notice, but when commodities do go up by that level, so at that point in time, generally it takes about 6 to 9 months for us to pause incidents of any increase in commodity costs in the form of a price increase after a little bit of a correction. So, not very far from now , we were at (+14%) level, Quarter 4 of last year, Quarter 3 of last year, part of Quarter 2 of last year, we were closer to that particular range and as was mentioned in Arnab’s initial introductory speech, we expect Quarter 4 raw material prices to be at Quarter 3 level stable levels . In those circumstances, when raw material prices at least stagnate, I know it is still very high. If you ask us, we feel natural rubber international prices are at least $200 higher than the level at which it should be operating, based on the relative prices of other commodities. And similarly, the crude derivative prices should have been corrected little more. This is what a common-sense logic says, but in reality, does not happen. So, when the raw material price s remain at Quarter 4 and Quarter 3 level, any price increase that we take would be margin positive. And let us assume raw material remains even at the current elevated level for 2 quarters to 3 quarters, we should get back to a slightly higher end of the range of margin and that is what we expected to be. So, if raw material remains, maybe Quarter 1, Quarter 2 level, we would be higher than the midrange, which let us assume 10%- 15% level. That is where we see, difficult to predict, but that is the way it can move.

So, by third quarter or fourth quarter of next year, can we see our margin going to say around 14%? Is it the way we are looking at it, provided the raw material remains at this kind of level?

Yes, two quarters back, we were 14, and we look forward . Internally, we would always try to get it earlier. We will work towards that. While we don't want to give guide you like that, but internally that is the way direction in which we would like to move.

So, the takeaway I have is that from the peak of the raw material price in 6-9 months, the hike in raw material price gets passed on, is that the right way to look at it?

It takes that much time to pass on most part the incidence of raw material cost. That is the way it happens. Once it remains stable, it takes almost 6 months for it to be fully passed down.

Thank you. Next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead.

Couple of questions, one is on the capacity expansion side, we have this enabling approval for 2-Wheelers, and we have expanding capacity on the OHT side, apart from these two, any other expansion which we are either doing right now or looking to add capacities going forward?

Yes, I will explain the CAPEX framework, which is being consistent for some time now and will be so in future. You are right about Am bernath OHT, and you are right about enabling approval. We are also carrying on incremental addition of capacity to Chennai in passenger car tyres as well as in truck bus radial tyres, s o it is all flexible , gradual. Sometimes we will do a civil somewhere, upstream equipment somewhere, downstream equipment somewhere, but our CAPEX guidance overall is bite size, which we have been maintaining. This year, it was 1050. We have not yet formed an opinion of what it will be next year, but it will be in a similar range. It will be bite size. We will never have a CAPEX plan of Rs. 3,000 crores in one year etc., going forward. So, it will all fit into that scheme of things. Right now, everything is brown field, so very easy to manage.

And for Chennai PCR and TBR, what kind of capacity addition should we budget for?

Chennai is a continuous process. There is no end game. For example, right now we have been talking about 20,000 that may go up to maybe another 7 000-8000 that may further go up by another 7000-8000. It will go and within that 7000-8000 in a year, we may do only 2000. So, it can go up to 35,000-40,000 tyres in Chennai in the brownfield peak capacity. Right now, we are at about the halfway mark, you can say so. Truck bus radials, similarly, we are at the less than halfway mark. It can go up to maybe 3000 overall and we have approval for that from the board, but we will do it in a very measured way, in a very tight and measured way. Right now, we are about less than 30% of that figure. So, we will keep adding every year.

So, TBR in Chennai would be what would be the peak capacity we can do from the current infrastructure?

3000.

3000 per day?

That is right.

Kumar, from the tax rate perspective, how should we think about the tax rate at consol obviously have its influence, but our first nine months we have seen it to be close to about 28% at consol level?

See the best way to understand ETR is on stand alone. So, consol may sometimes be a little bit confusing and now, there is hardly any difference both in revenue as well as in profits between CEAT standalone and CEAT consolidated. Sometimes our JV in Bangladesh loss in case we are incurring or that may have a marginal impact on income tax ETR, so ETR we are close to about 26% in that range on a standalone basis. And as there are no more tax benefits available , so therefore ETR would be closer to that range only.

Thank you. The next question is from the line of Nandan Pradhan from Emkay Global Financial Services. Please go ahead.

I just wanted to know your thoughts about the volume and the value growth for next year across segments? And also if you could shed some light on what is driving your outperformance in the OEM category versus the competition? How are the market share gains panning out?

You wanted to know the market growth for next year?

So, your thoughts on h ow do you see CEAT’s volume and value growth across segments next year?

Next year, next calendar year of financial year, right?

FY26, first of all, it will depend on the market growth, which I shared earlier. We would continue to push strongly on the passenger side, which is passenger car tyres and 2-Wheeler in replacement. A nd TBR will maintain the momentum . International business with the operationalization of the Camso, I think there will be synergies kicking in for the OHT segment gradually, maybe in the second-half of the year. So, that will be a strong focus in the sense OHT is now about 15% of our turnover. And that will almost double or more than double with the acquisition. So, lot of synergies will kick in. And OEM, you asked how it will be increased. So, in OEM, there have been a lot. It takes a lot of effort in homologation and getting approvals. Those approvals have gradually coming in now. So, in passenger car tyres across OEM, several vehicles are getting launched , some got launched in Q3, Q4, Q1, Q2 l ike that and that is completely visible. That could be one or two months delay here and there, or it may be preponed. So, our capacities are aligned, plant approvals are aligned. So, we have a fairly good view of how much volume and hence share of business will increase in OEM in both 4-Wheeler and 2- Wheeler.

Thank you. The next question is from the line of Vijay Pandey from Nuvama. Please go ahead.

Sir, there are two questions. One is I wanted to check what is like, profit and exposure in terms of natural number and synthetic rubber like, how much of the total cost will be from raw material, natural rubber and synthetic?

While natural rubber is easier to explain because there are not many grades of natural rubber available. There are only two different sources of natural rubber, one being India and another being imports. Largely Indian rubber is called a sheet rubber and imports at least what we do import is largely block rubber. Currently, local natural rubber prices are in the range of Rs. 190 per kg and international natural rubber prices are in the range of $1,900-$2,000 that translates to Rs. 205 per kg to Rs. 210. So, that is what happens. Synthetic rubber has different grades of synthetic rubber, one is called as polybutadiene rubber, which is PBR, then another one is SBR and within them also there are multiple grades, and the prices vary depending on the grade of synthetic rubber and generally, synthetic rubber prices currently are in the range of Rs. 150-Rs. 225 per kg varying between grades, that is the way it is.

And sir, in terms of exposure like 30% natural number is 30% evenly distributed or?

In value terms, it is possible, in volume terms, natural rubber could be about 25% and synthetic rubber could be also closer to that number. In value terms, they would be close to about 30% each.

And sir, can you please explain the capacity expansion plan of like you are adding the new capacity in the 2-Wheelers and 3-Wheelers segments, can you little bit explain about what is the kind of revenue and expectation from that capacity expansion that would be helpful?

I think we took an enabling approval for Nagpur . I think Arnab just explained about overall capital framework for us. We tried to create some upstream capacities available and keep on adding downstream as we see demand is the CAPEX, capital expenditure framework that we have, and our capital allocation determines how much to allocate for each of the key categories. In case of 2-Wheeler, we took an enabling approval, so that we could plan some upstream over a period of time. And currently, as Arnab also earlier mentioned about capacity utilization of 2- Wheeler plant at Nagpur, we also outsource some 2-Wheelers. We are in the range of 85%-90% kind of capacity utilization level. We can still get a little more from the existing plants. And the 2-Wheeler has grown this year well in the first 9 months of the year in the replacement segment and it is about 30% of our revenue. That is the way we see overall.

Thank you. Ladies and gentlemen, this will be our last question. It is from the line of Garvita from Seven Island PMS. Please go ahead.

My question is around the raw material t hing. So, we have insoluble sulfur as one of the raw materials for manufacturing tyre, right? I wanted to understand what is the percentage share of insoluble sulfur in manufacturing one tyre or in total?

We don't have that information immediately available. If you could reach out to our Investor Relations, Arjun, we would share the details through him. Is that okay?

That is fine.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments.

Thank you very much for attending the call and again wish you a very Happy New Year and looking forward to seeing you again in April.

Thank you. On behalf of Anand Rathi Shares & Stock Brokers Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.