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Tyre major CEAT's stock came under significant pressure on Monday (July 21), declining 5.76% to close at ₹3,607, following a downgrade from global brokerage Nomura.This sharp fall adds to the recent woes of the stock, which is now down almost 10% in the last two sessions, despite having delivered nearly 30% returns in the three months leading up to its Q1FY26 earnings.Nomura has lowered its rating on CEAT to 'neutral' from 'buy,' and consequently, has reduced its target price to ₹3,906 from ₹3,945 per share. The downgrade stems from a confluence of factors, primarily the company's disappointing Q1FY26 performance and concerns surrounding its Camso acquisition.CEAT's Q1FY26 earnings were largely below market expectations. The company experienced a notable decline in its gross margin, which fell by 250 basis points year-on-year, and 70 basis points sequentially. This was largely attributed to an unexpected increase in input costs, contradicting the management's earlier anticipation of flat sequential input costs.Adding to the headwinds, Nomura has expressed reservations about the value accretion from CEAT's acquisition of Camso. While Camso was acquired with a reported revenue of $213 million in 2023, a subsequent sharp drop in revenue has led Nomura to believe that the 10x EV/EBITDA valuation for the acquisition might be expensive.Further, the imposition of a 30% US tariff on Sri Lanka, effective August 1, is expected to delay Camso's recovery and negatively impact CEAT's overall revenue.ALSO READ | CEAT sticks to double-digit revenue growth goal in FY26 even as cost relief lagsThe brokerage also highlighted persistent input cost concerns. Despite the management's Q1 expectations of stable sequential input costs, they have risen. Nomura projects that a sustained increase in these costs could further impact CEAT's earnings, leading them to decrease EBITDA estimates by 9% for FY26 and 5% for FY27. They have also revised down EPS estimates by 16% for FY26 and 6% for FY27.Despite the recent share price decline, Nomura finds CEAT's current valuation of 7.8 times FY27 EV/EBITDA to be a "fair value," underpinning their decision to downgrade the stock rather than suggesting further upside. CEAT currently holds a market capitalisation of approximately ₹14,565 crore.ALSO READ | BL Kashyap shares gain over 5% after firm bags ₹910-crore construction orderNewsLive TVMarketPopular CategoriesCalculatorsTrending NowLet's Connect with CNBCTV 18Network 18 Group :©TV18 Broadcast Limited. All rights reserved.