CEAT Ltd Quarterly Results Update

About CEAT
Established in 1958 and a flagship company of RPG Enterprises, is a leading tire manufacturer in India. CEAT has a strong presence in both domestic and global markets. It offers a wide range of high-quality tires for various vehicles, including heavy-duty trucks, buses, cars, motorcycles, and more. CEAT holds a significant market share in the truck, light truck, and two-wheeler segments. Its tubes and flaps are well-known for their durability and superior quality.

Quarterly Result Highlights
CEAT Ltd. had a strong Q4FY23.They achieved an EBITDA margin of 13.1% and a net profit of Rs. 132 crores. The company experienced strong demand across segments and geographies. For FY23, their consolidated revenue was Rs. 11,315 crores (up 21%), with EBITDA of Rs.982 crores (up 33%) and PAT of Rs.182 crores (up 158%).

The growth was driven by volume growth and price increases. While exports and the replacement market showed improvement, macroeconomic challenges and currency devaluation still impacted volumes. The company achieved margin expansion and higher profitability through a better product mix and reduction in raw material costs, despite increased employee costs and advertisement spending.

Valuation and Outlook

CEAT had a strong quarter, benefiting from market recoveries and expanding its market share in the passenger car radial segment. The company is optimistic about the future due to strong demand trends and plans to invest in expanding its agri-radial capacity and downstream assets. Key drivers moving forward include the US market demand, infrastructure spending, and volume growth in India. While there are concerns about raw material prices and recessionary pressures, overall, CEAT’s business segments are on a positive growth trajectory, with a focus on margin-rich segments like TBR and off-highway.

Key Concall Highlights

  1. CEAT introduced the “Milaze X3” tire range in the replacement market. These tires are designed to offer improved fuel efficiency and durability.
  2. The company’s market share in the passenger car radial segment rose to 14.2% in Q4FY24, compared to 13.4% in Q3FY24.
  3. The company has the capacity to produce 120,000 passenger car radial (PCR) tires and 50,000 truck and bus radial (TBR) tires per month.
  4. The company is planning to increase its truck and bus radial (TBR) tire capacity to 130,000 units per month by the end of FY24.
  5. It is expanding its capacity at the Ambernath plant by 20%, raising the total capacity to around 105 tons per day (TPD). It plans to further increase it to approximately 150 TPD by the end of FY24.
  6. In Q4FY23, overall volume growth was 6%. Replacement volumes increased by 5% compared to the previous year, original equipment manufacturer (OEM) volumes grew by 20% year-on-year (YoY), and exports declined by 11% YoY.
  7. The sales volume of truck and bus radial (TBR) tires grew by 10% compared to the previous quarter. This increase was mainly driven by higher demand from the mining and infrastructure sectors.
  8. The sales volume of two-wheeler (2W) tires rose by 9% compared to the previous quarter. This growth was driven by increased demand in the replacement market. Debt stood at Rs. 2,093 crores (down Rs. 100 crores QoQ).
  9. Working capital decreased by Rs. 221 crores QoQ and Rs. 170 crores YoY, mainly due to lower inventories, increased payables, and improved receivables management.

Click here to view the detailed report.

Read more about the other results declared in Q4

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