CEAT Ltd expects a sharp rise in demand for its tractor and entry-level motorcycle tyres following sweeping consumption tax cuts starting September 22.
Under the new regime, tyre taxes will fall from 28% to 18%, while tractor tyres will see the rate slashed further to 5%.
The company anticipates that rural and semi-urban markets will drive most of the incremental demand, especially in the replacement tyre segment.
Currently, about 53% of CEAT’s revenue comes from tyre replacement; automaker supplies and exports make up the rest.
Tractor tyres contribute roughly 10% of CEAT’s earnings, so the steep tax reduction in this category could significantly boost margins.
CEAT’s management has also said it will pass cost savings through to customers, which could stimulate volume growth.
With demand expected to increase in the next fiscal 2026, the company is forecasting double-digit growth, especially from its replacement and rural segments.
Analysts believe lower tax burdens will not only help CEAT but also the broader tyre and auto ancillary industries, especially where input cost pressures have been high.
Risks remain: supply chain constraints, raw material price volatility, and whether the demand uptick can be sustained once tax benefits are fully in the price.
For investors, CEAT looks like a stock to watch closely in upcoming quarters, as sector-tailwinds combine with policy support.