Ceat Ltd. share price target

CEAT's 2QFY22 operating performance was led by a strong revenue growth, although higher depreciation and interest impacted PAT. Contrary to our earlier expectation, cost inflation is expected to persist in 2HFY22, thereby deferring CEAT's margin improvement to 1HFY23. Hence, we cut our FY22E/FY23E EPS estimates by ~42%/13% to factor in the RM cost inflation, higher depreciation and interest cost. Maintain Buy....

PV and 2W segments are seeing strong momentum while T&B segment is going to gradually pick up from H2FY22. High single digit growth is difficult to achieve in FY22 because of high base. Raw material cost is likely to increase by 3% to 4% in Q2FY22 (QoQ) Company has already taken a price hike of ~4% in Q1FY22 and expects to take another 3% hike in Q2FY22....

Background: CEAT is one among the top four tire manufacturers in India and is a part of the RPG group. The company has a total manufacturing capacity of 0.1mn + tyres/day with plants situated in Nashik, Bhandup (Mumbai),Ambernath, Halol, Nagpur and Sri Lanka. The company manufactures all tires: Truck & Bus (33%), 2W/3W (30%), Passenger vehicles (13%), LCV (8%), Farm (9%), and Specialty (7%). In terms of market, replacement contributed 71% of the sales while OEM and exports make up 17% and 13% of the sales, respectively in 3QFY21. CEAT has a robust distribution network consisting of over 3,400+ dealers, 33 regional offices...

CEAT's Q1 revenue fell below projections at Rs 19bn and gross margin declined, weakening EBITDA margin to 8.7%. Adj. PAT was at Rs 199mn

At its annual investor event, CEAT outlined plans for market share gains and capacity adds underpinned by an upbeat long-term demand outlook

Background: CEAT is one among the top four tire manufacturers in India and is a part of the RPG group. The company has a total manufacturing capacity of 0.1mn + tyres/day with plants situated in Nashik, Bhandup (Mumbai),Ambernath, Halol, Nagpur and Sri Lanka. The company manufactures all tires: Truck & Bus (33%), 2W/3W (30%), Passenger vehicles (13%), LCV (8%), Farm (9%), and Specialty (7%). In terms of market, replacement contributed 71% of the sales while OEM and exports make up 17% and 13% of the sales, respectively in 3QFY21. CEAT has a robust distribution network consisting of over 3,400+ dealers, 33 regional offices...

COFORGE: Bumper FY22 guidance; reiterate BUY. CEAT: Rising raw material costs to impact earnings; SELL

Cost inflation to keep margin under pressure over the next two quarters CEAT's 4QFY21 performance was impacted by RM cost inflation and weaker mix. While cost inflation will impact near-term performance, strength in demand will enable gradual pass through of cost. We cut our FY22E/FY23E EPS by ~31%/6% to factor in near term impact from the second COVID wave and RM cost inflation. Maintain Buy....

CEAT's revenue was 8% ahead of our estimate at Rs 23bn in Q4FY21.

During the last upcycle, limited focus on CV category tyres eroded CEAT's market share in both OEM and replacement markets.