India's CEAT misses Q3 profit view on higher raw material prices

JK Tyre & Industries

15/01/2025 14:47

Jan 15 (Reuters) - Indian tyre maker CEAT  CEAT.NS  reported a bigger-than-expected fall in third-quarter
profit on Wednesday, as higher rubber costs outweighed the benefits of strong demand for replacement tyres.
    The company said consolidated net profit fell 46.5% to 971.1 million rupees ($11.25 million) for the quarter
ended Dec. 31 from 1.81 billion rupees a year ago.
    Analysts, on average, expected 1.33 billion rupees, as per data compiled by LSEG. 
    Revenue from operations rose 11.4% to 33 billion rupees, while total expenses grew about 16%.
    For further earnings highlights, click (Full Story)

KEY CONTEXT
    
CEAT, whose clients include Tata Motors  TAMO.NS  and Maruti Suzuki India  MRTI.NS , is the first listed Indian tyre
maker to report results for the December quarter.
    Analysts have noted that demand for replacement tyres persisted in the reporting quarter. This, along with price
hikes, improved the company's revenue.
    However, rising prices of rubber cut into CEAT's bottomline, as raw materials costs jumped about 25%. Lower tyre
demand from original equipment manufactures also weighed. 
    Company said it passed on part of the rise in raw material costs in select categories during the quarter to
customers.

PEER COMPARISON


                                 Valuation (next 12    Estimates (next 12          Analysts' sentiment          
                                       months)              months)                                         
                         RIC        PE      EV/EBITD   Revenue    Profit     Mean     # of      Stock to      Div
                                               A       growth     growth    rating*  analyst     price       yield
                                                         (%)        (%)                 s       target**      (%)
        CEAT           CEAT.NS     17.19      7.64      15.42      26.18      Buy      14         0.90        0.99
         MRF           MRF.NS      21.81     10.39      10.82      11.70     Sell       4         0.94        0.18
    Apollo Tyres       APLO.NS     14.91      7.37      7.41       23.62      Buy      22         0.85        1.33
      JK Tyre &        JKIN.NS     10.61      6.73      7.08       16.07      Buy       4         0.71        1.24
     Industries                                                                                             
 

* The mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading
above the PT




OCTOBER-DECEMBER STOCK PERFORMANCE
    
    
    
    
    
-- All data from LSEG

-- $1 = 86.3050 Indian rupees

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CEAT Q3 Performance    https://tmsnrt.rs/3WhU3BC
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 (Reporting by Meenakshi Maidas in Bengaluru; Editing by Janane Venkatraman)
 ((Meenakshi.Maidas@thomsonreuters.com; +91 8921483410;))