India's CEAT reports five-fold jump in Q4 profit on lower raw material costs

JK Tyre & Industries

04/05/2023 14:42

May 4 (Reuters) - 
  
Indian tyremaker CEAT Ltd  CEAT.NS  reported a
more-than-five-fold increase in its fourth-quarter profit on
Thursday, aided by low raw material costs and strong domestic
demand.
    CEAT's consolidated net profit rose to 1.34 billion rupees 
($16.40 million) in the three months ended March 31, from 252.5
million rupees a year ago.
     Analysts, on average had expected a profit of 908.3 million
rupees, according to Refinitiv IBES.
    Indian car and bike makers have reported strong domestic
growth, which, in turn, has boosted demand for tyre makers. They
have also hiked prices that, analysts said, would boost margins.
    The Mumbai-based CEAT's revenue rose about 11% to 28.75
billion rupees. Its total expenses rose 5% but the cost of
materials consumed fell 6.1%.
    That, and the price hikes, helped CEAT's earnings before
interest, taxes, depreciation, and amortization (EBITDA) margin
increase to 13.1% from 7.2% last year.
    "On exports, we continue to face pressure as a result of
global economic headwinds, largely spurred by the ongoing war
and the currency devaluation," Vice Chairman Anant Goenka said
in a statement. 
    However, while wholesale commercial and passenger vehicle
sales growth moderated in April, analysts expect demand for
replacement tyres would provide cushion to tyremakers including
CEAT rivals MRF Ltd  MRF.NS , Apollo Tyres Ltd  APLO.NS  and JK
Tyre & Industries Ltd  JKIN.NS  in the coming quarters.
    "We have begun to see some recovery in exports and the
replacement market, especially in the commercial category. We
are hopeful that the coming quarters will see a further uptick
in growth," CEAT said.
    Earlier this week, MRF Ltd  MRF.NS  said its fourth-quarter
profit more than doubled.
    CEAT's shares closed 1.07% higher. The company recommended a
final dividend of 12 rupees per share. 
    
    
    

($1 = 81.7320 Indian rupees)

 (Reporting by Manvi Pant in Bengaluru; Editing by Janane
Venkatraman)
 ((Manvi.Pant@thomsonreuters.com;))