Ceat Ltd. share price target

Adjusting for a one-time extraordinary expense, CEAT’s 3QFY26 earnings came in line with estimates at INR1.96b. Healthy volume growth across segments, coupled with stable commodity prices, drove margin beat at 13.6%.

We recommend a BUY on the stock with a target price of Rs 4,140/share, implying an upside of 10% from the CMP.

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In a deal valued at ~USD 225mn, CEAT has completed its acquisition of the CAMSO brand’s off-highway construction equipment-bias tyre and tracks business from Michelin.

We attended CEAT’s analyst meeting on developments in the Camso acquisition. The acquisition (not built in) is in line with CEAT’s capital allocation priorities and supports its 3 growth pillars – premiumization, globalization, higher margin OHT.

Healthy traction in the OE business and steady replacement demand (led by 2W/TBR segment) drove growth for CEAT in Q1FY26.

CEAT logged a healthy Q1 with 10.5% revenue growth led by 9%/1.5% volume/realization growth; overall vol growth was driven by a mid-20s/singledigit growth in OEM/replacement; realization was mostly muted due to headwinds for international business.

CEAT’s Q1FY26 earnings stood at INR1.15b, below our estimate of INR1.5b, impacted by lower-than-expected margins, higher interest costs, and lower other income.

We met CEAT management at the RPG Conference on 3rd Jun’25. In India business, management continues to expect good demand in the tractor and 2W replacement segments even as 2W OEM demand is now slowing down.

We recently attended CEAT’s Investor Day to understand its medium-term growth strategy. Over the next two years, CEAT aims to gain leadership position in the PV replacement segment (currently, no. 3 player with 16% market share); it is also targeting ~200bps of market share expansion in the TBR segment.

We attended CEAT’s annual analyst meeting. The management retained its mid-single-digit replacement growth guidance. Rural is outpacing urban (key for CEAT’s 2Ws/farm segment) on a favorable monsoon outlook; it is eyeing share gains in PV OEMs amid rising salience of higher-rim size tyres.

Consolidated revenue increased by 14.3% YoY, driven by healthy volume growth in the replacement and OEM segment. International demand was impacted due to global macro-economic conditions while elevated input cost continued to impact margins as gross margin and EBITDA margin declined by 483bps YoY/174bps YoY respectively. Reported PAT remained flat, impacted by EPR related expenses. In comparison to previous year the performance remains weak, however, sequentially the performance seems to have stabilized...

CEAT reported a strong Q4; revenue growth accelerated to 14% (9M: 9.5%). EBITDAM expanded by 100bps QoQ on 64bps higher gross margins (9% beat on consensus EBITDA).

CEAT recorded accelerated revenue growth of 11% in Q3FY25 (~7.9%/1.5% volume /realization growth) with EBITDA ~5% above Consensus’, despite the ~60bps QoQ margin decline to 10.3% amid the ~1% higher RM.

Ceat’s takeover of Camso would expand its presence in the higher profitability OHT segment. Further, it would also strengthen its presence in construction equipment (CE) globally. It would also add OEMs and distributors (key for success).

Attended CEAT’s conference call on its recent strategic acquisition (press release) of Camso (maker of high-margin Off-Highway bias tyres and tracks for compact construction equipment) brand’s business assets from Michelin, along with 2 plants in Sri Lanka at ~1x CY23 EV/Sales, for USD225mn (similar to replacement cost; includes global Camso brand access)