CEAT Reports Disappointing Q3
- 16th January 2025
Aaj Ka Bazaar
The US market surged on account of easing inflation, which increased the possibility of a rate cut by the Federal Reserve. Asian markets followed these trends and advanced on Thursday. Gift Nifty, trading higher today indicates a positive start for the Indian benchmark indices, in line with the global trend. However, FII remains a net seller in the Indian market on Wednesday. The key highlight of the day will be the Q3 earnings performance of major players like Infosys, Reliance Industries Limited and Axis Bank.
Markets Around Us
BSE Sensex –77,147.95 (0.55%)
Nifty 50 – 23,340.25 (0.55%)
Bank Nifty – 49,244.75 (1.01%)
Dow Jones – 43,306.30 (0.20%)
Nasdaq – 19,510.62 (2.45%)
FTSE – 8,301.13 (1.20%)
Nikkei 225 – 38,577.17 (0.34%)
Hang Seng – 19,460.21 (0.90%)
Sector: Tyres & Rubber
CEAT Q3 Results Disappoint, Shares Plunge
CEAT’s shares dropped by over 7% on January 16 after the company reported a 46.5% year-on-year decline in net profit for Q3 FY25, falling to Rs 97.1 crore from Rs 181.5 crore in the same quarter last year. Although the company’s revenue grew by 11.4% to Rs 3,299.9 crore, operating profit (EBITDA) dropped by 18.3%, with the margin narrowing from 14.1% to 10.3%. The decline in profit was mainly due to rising raw material costs, although price hikes and cost control efforts helped offset some of the impact. Despite the challenges, the company reported strong growth in the replacement segment and maintained a stable order pipeline. CEAT also plans to invest Rs 400 crore to expand its Butibori plant in Nagpur, which will increase production by 30% by 2027. Shares fell by 6.5% in early trade and have dropped nearly 9% over the past week.
Why it Matters:
CEAT’s profit decline and shrinking margins signal financial stress, impacting investor confidence. Despite revenue growth, rising raw material costs and lower profitability could pressure future performance. The stock’s sharp drop reflects market concern over sustained profitability and growth prospects.
NIFTY 50 GAINERS
HDFCLIFE – 644.75 (8.51%)
ADANIENT – 2512.35 (5.20%)
SBILIFE – 1526.70 (3.66%)
NIFTY 50 LOSERS
HINDUNILVR – 2351.55 (-0.90%)
TATACONSUM – 949.50 (-0.63%)
CIPLA– 1438.10 (-0.63%)
Sector: Life Insurance
HDFC Life Surges 10% on Strong Q3
HDFC Life’s shares surged 10% on January 16 after the company reported better-than-expected Q3 results for the October-December period. Its net profit rose 14% year-on-year to Rs 415 crore, and net premium income grew 10% to Rs 16,771 crore. Key metrics like Annualised Premium Equivalent (APE) and the Value of New Business (VNB) exceeded market expectations, increasing 15.5% and 17.8% respectively. Brokerages remain optimistic, with HSBC and Jefferies both maintaining ‘buy’ ratings and target prices of Rs 750, citing strong margins and new customer acquisition as drivers of future growth. However, CLSA lowered its target price to Rs 690, noting slower growth and uncertainty over regulatory changes. Despite the concerns, HDFC Life’s healthy performance in a challenging environment has led to a strong market reaction, with shares up nearly 10% in early trading.
Why it Matters:
HDFC Life’s strong Q3 results boost investor confidence, driving a 10% share price jump. Key metrics surpassed expectations, signaling healthy growth potential. Brokerages remain bullish, supporting a positive outlook despite regulatory uncertainties.
Around the World
Asian stocks saw a sharp rise on Thursday, driven by a positive reaction to softer U.S. inflation data. Markets gained after a strong rally in Wall Street, with U.S. futures steady in Asia. The focus now shifts to Japan’s Bank of Japan (BOJ) meeting next week, with possible rate hikes if the economy continues improving. Japan’s Nikkei 225 rose 0.4%, but a stronger yen weighed on the index, as it can hurt exporters’ profits. Australia’s S&P/ASX 200 jumped 1.4%, boosted by strong job market data. In China, markets were more cautious ahead of key economic data, including GDP and industrial production figures, due on Friday. South Korea’s KOSPI gained 1.2%, despite the Bank of Korea deciding to hold interest rates steady at 3.00%, against expectations of a cut due to ongoing political unrest. Overall, the market’s optimism was fueled by hopes of slower inflation and potential rate cuts in major economies.
Option Traders Corner
Max Pain
Nifty 50 – 23,300
Bank Nifty – 50,000
Nifty 50 – 23,217.77 (Pivot)
Support – 23,141, 23,070, 22,994
Resistance – 23,289, 23,364, 23,436
Bank Nifty – 48,785 (Pivot)
Support – 48,488, 48,224, 47,926
Resistance – 49,049, 49,347, 49,610
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