CEAT up 6% on 14% YoY growth in Q4 EBITDA, partial resumption of operations

The company has resumed operations at most of its factories with easing in lockdown restrictions, and is gradually witnessing pick up in demand as well, Kumar Subbiah, CFO of CEAT said

Shares of CEAT advanced 6.3 per cent to Rs 820 on the BSE on Friday after the tyre manufacturer's standalone operating performance improved during the March quarter of FY20 (Q4FY20) despite subdued demand amid Covid-19 outbreak.

It's standalone EBITDA logged a 14.4 per cent YoY rise at Rs 190 crore for Q4FY20, while margin improved to 12.5 per cent, up 280 bps YoY. For the whole FY20, EBITDA came in at Rs 705 crore, up 10.6 per cent YoY.

On consolidated basis, the company's EBITDA for FY20 was Rs 740 crore, up 12 per cent compared to previous fiscal, while margin expaned by 340 bps YoY to 12.9 per cent.

"We managed to deliver good improvement in EBITDA margins in Q4 despite a drop in revenues in the second half of March due to Covid-19. Better product mix, lower raw material cost, and strong cost controls helped in expansion of margins," said Kumar Subbiah, chief financial officer of CEAT. 

Revenue from operations declined to Rs 1,573.41 crore during the quarter under review as compared with Rs 1,760.47 crore in the corresponding of 2018-19. For the whole of FY20, revenue declined to Rs 6,778.83 crore as against Rs 6,984.51 crore in 2018-19.

Besides, it reported a 19.58 per cent decline in consolidated net profit at Rs 51.72 crore for Q4FY20, as against a net profit of Rs 64.32 crore in January-March quarter a year ago. 

Apart from healthy operating performance, buying was witnessed on the counter as the company said on May 27 that it has partially resumed operation at various plants in Mumbai. 

"The company has resumed operations at most of its factories with easing in lockdown restrictions, and is gradually witnessing pick up in demand as well," Subbiah added. 

Early this month, CEAT had said in a regulatory filing that with government announcing various relaxations and guidelines, the company has been able to partially resume its functioning at its plants located at Nasik, Nagpur (Maharashtra) and Halol (Gujrat), with restricted movement of manpower as prescribed under the government guidelines.

At 11:07 am, the stock was ruling 3.6 per cent higher at Rs 799 apiece, as against a 47 points, or 0.15 per cent, slide in the benchmark S&P BSE Sensex. A combined 0.46 millon shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.