CEAT hits the roof after strong management commentary

15 Sep 2022 , 03:07 PM

The stock was currently frozen at its 52 week high level. In an investor meet on Wednesday (14 September), CEATs management remained cautiously optimistic on the demand scenario. The managements said that currently demand remains stable with demand from OEM growing, replacement demand being stable, while exports are weak currently. Raw material cost benefit will reflect from 3QFY23 with cost savings to come from 3QFY23. The company expects EBITDA margin recovery to at least 10-12% v/s 6% in 1QFY23 and 7.6% in FY22. On capacity front, the management said the Capex is under control, there is headroom to debottleneck capacity. The expect to earn a revenue of ~Rs 13000 crore post expansion v/s run-rate of ~Rs 11300 crore in Q1. Meanwhile, the media reported that the recent correction in Indian Rupee, crude prices and price increases could aid the recovery in EBITDA margin. The recovery in demand and easing of commodity prices will drive a strong recovery from H2FY23. Valuations, at 40.3x/13x FY23E/FY24E consolidated EPS, do not fully capture the ramp-up of new capacities and stabilization in raw material cost, a domestic broker said in a recent note. CEAT is an Indian multinational tyre manufacturing company owned by the RPG Group. On a consolidated basis, net profit of CEAT declined 61.43% to Rs 9.25 crore on 47.84% rise in net sales to Rs 2818.38 crore in Q1 June 2022 over Q1 June 2021. Powered by Capital Market – Live News