Ceat Ltd. share price target

Sector: Auto-ancillary /Mid-Cap | Earnings Update 3QFY18 Background: CEAT, part of the RPG group, is one among the top four tire manufacturers in India with a total manufacturing capacity of >1000 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai),Ambernath, Halol, and Gujarat, the company manufactures all tires: Truck & Bus (33%), 2W/3W (32%), Passenger vehicles (14%), LCV (12%), Off Highway (12%). In terms of market, replacement contributed 62% of the sales while OEM and exports make up 26% and 12% of the sales, respectively. CEAT has a robust distribution network consisting of over 4,500 dealers, 33 regional offices and more than 500+ C&F; agents. CEAT commands >12% market...

excise. Exceptional item of INR80m was on account of VRS to employees. Consequently, adj. PAT fell 26.8% YoY to INR779m (est. of INR921m). Stage set for robust H2: Raw material prices declined 520bp QoQ on a comparable basis (post excise net-off) in 2QFY18, after increasing by 260bp QoQ in 1QFY18. Exports also suffered in H1 on account of an appreciating INR, foreign currency unavailability in Egypt, and political unrest in countries like Kenya and Indonesia. However, with raw material prices and currency gaining stability and restocking picking up pace from the month of...

On consolidated basis, the higher raw material prices in the mid of financial year has affected the overall growth of the company, inspite of prices hikes taken towards the end of FY17 which are less than the effective increase in raw material costs. In Q4FY17, consolidated revenue grew by about 5.0% on YoY basis. Consolidated gross margin for the quarter stood at 33.3% and it contracted by about 552 basis points. EBITDA margin for the quarter was 8.1% and the net profit margin was 4.0%.

Revenue increased by 5.19% to Rs. 1457.83 Cr in Q4FY17 when compared to the previous quarter. Also it increased by 5.21% when compared with Q4FY16.

Sluggish quarter but outlook for the sector improving Ceat Ltd (Ceat), the flagship company of RPG Enterprises, has been in the business of manufacturing and selling tyres. It derives 63%/23%/14% of its revenues from replacement/OEM/exports markets. During Q4FY17, consolidated sales rose 5.5% YoY mainly driven by volume growth of ~4.5% YoY witnessed in standalone business....

Background: CEAT, part of the RPG group, is one among the top four tire manufacturers in India with a total manufacturing capacity of >1000 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai) and Halol, Gujarat, the company manufactures all tires: Truck & Bus (33%), 2W/3W (29%), Passenger vehicles (13%), LCV (13%), Farm (8%) & Specialty (5%). In terms of market, replacement contributed 63% of the sales while OEM and exports make up 23% and 14% of the sales, respectively. CEAT has a robust distribution network consisting of over 3500 dealers, 33 regional offices and more that 100 C&F; agents. CEAT commands >12% market...

Background: CEAT, part of the RPG group, is one among the top four tire manufacturers in India. With a total manufacturing capacity of >1000 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai) and Halol, Gujarat, the company manufactures all tires: Truck & Bus (32%), 2W/3W (29%), Passenger vehicles (13%), LCV (13%), Farm (8%) & Specialty (4%). In terms of market, replacement contributed 63% of the sales while OEM and exports make up 24% and 13% of the sales. CEAT has a robust distribution network consisting of over 3500 dealers, 33 regional offices and more that 100 C&F; agents. CEAT commands >12% market share in the T&B;...

Background: CEAT, part of the RPG group, is one among the top four tire manufacturers in India. With a total manufacturing capacity of ~1000 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai) and Halol, Gujarat, the company manufactures all tires: Truck & Bus (34%), 2W/3W (28%), Passenger vehicles (13%), LCV (12%), Farm (9%) & Specialty (4%). In terms of market, replacement contributed 64% of the sales while OEM and exports make up 23% and 13% of the sales. CEAT has a robust distribution network consisting of over 3500 dealers, 33 regional offices and more that 100 C&F; agents. CEAT commands 12%...

Standing tall as the Vanguard of the RPG Group, CEAT TYRES has been carrying the mantle of the nation for a little over half a century. Famously known as the flagship company of the Indian Tyre Industry, Ceat specializes in manufacturing Automotive Tyres, Tubes and Flaps. The company had started its operations a decade after India won its independence from British Colonialism and renamed itself as CEAT LIMITED in the year 1990. As a...

Background: CEAT, part of the RPG group, is one among the top four tire manufacturers in India. With a total manufacturing capacity of 810 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai) and Halol, Gujarat, the company manufactures all tires: Truck & Bus (38%),2W(27%), Passenger vehicles (11%). LCV (13%), Farm (6%) & Specialty (4%). In terms of market, replacement contributed 61% of the sales while OEM and exports make up 23% and 13% of the sales. CEAT has a robust distribution network consisting of over 3500 dealers, 33 regional offices and more that 100 C&F; agents. CEAT commands 12% market share in the T&B;...