CEAT Ltd share Price Today

CEAT, part of RPG group is one of the India’s most reputable tyre manufacturers established in 1958. It has prominent presence in India as well as in key international markets with 7 manufacturing plants & 51,000+ sales touchpoints.

• FY22 Channel Mix: Auto OEMs: 24%; Replacement: 56%; Exports: 20%  
• FY22 Segment Mix: PV: 18%; CV: 40%; Farm & OHT: 14%; 2W: 28%
• It is presently operating at ~80% capacity utilization levels
• It has ~4,600+ dealers, 380+ CEAT exclusives, presence in >110 countries

• Domestically, company is witnessing healthy demand traction from the OEM’s front with replacement demand being steady in nature. Robust demand is particularly being witnesses in the PV space with chip supply issue easing while steady MoM improvement is seen in the CV space
• On the exports front, demand in Europe & Indonesia is muted amid negative economic scenario. Sri-Lanka on the other hand is witnessing 50-60% decline in volumes with CEAT earning steady margins (unchanged).
• On Margins front company expects Q2FY23 to be on similar lines as Q1FY23 with recovery seen from Q3FY22 onwards. Overall company aims to achieve ~10%-12% operating margins over medium term. Replacement market business remains more lucrative in terms of margin than the OEM.
• Over past 3 years’ company has expensed ~₹3,300 crores out of planned ~₹4,000 capex w.r.t capacity building across Chennai and Ambernath plant. Capex for FY23E is planned at ~₹900 crores while the same for FY24E is seen at ~₹ 700 crore, with peak revenue potential pegged at ₹13,000 crore.
• Company remains committed towards keeping Debt/EBITDA at <3x.

Auto Tyre and Rubber Products company Ceat announced Q2FY24 results:

1. Financial Performance:
- CEAT's consolidated revenue for Q2FY24 reached Rs 3,053 crore, showing a growth of 4.0% QoQ and 5.5% YoY.
- The company achieved an EBITDA margin of 15.1%, a 202 bps expansion compared to Q1FY24.
- Net profit stood at Rs 208 crore for the quarter.

2. Business Outlook:
- CEAT is experiencing stable demand and witnessing mid-single-digit growth in all three segments - replacement, OEMs, and international business.
- The company's focus on product mix and judicious pricing has helped improve margins during the quarter.
- CEAT's consistent efforts in improving cost efficiencies and mix are yielding benefits, leading to improved margins for the fifth consecutive quarter.

3. Deming Grand Prize:
- CEAT was awarded the prestigious Deming Grand Prize by the Japan Union of Scientists and Engineers (JUSE) during the quarter.
- This recognition highlights CEAT's consistency and continuously improving customer experiences globally.
- CEAT is the only tyre company in the world to have received this recognition in the history of the award.

Commenting on the results as well as the outlook of the business, Arnab Banerjee, MD & CEO, CEAT said, “The demand continues to be stable, and we are witnessing mid-single-digit growth in our topline across all three segments – replacement, OEMs, and international business. Our focus on product mix and judicious pricing helped improve margins during the quarter.

During the quarter, we were delighted to achieve an important global recognition in the form of the Deming Grand Prize awarded by the Japan Union of Scientists and Engineers (JUSE). This points towards consistency and continuously improving experiences by our customers, across the globe. We are the only tyre company in the world to have received this recognition, in the history of this award.”

Kumar Subbiah, CFO of CEAT, said, “For the fifth quarter in succession, we have improved our margins quarter-on-quarter. Our consistent efforts in improving cost efficiencies and mix are yielding benefits. EBITDA Margin has crossed Rs 400 crore for the first time in a quarter leading to healthy improvement in our net profits. We have also managed to bring our standalone debt down by ~Rs 103 crore through efficient management of cash flows and improved operating performance.”

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