Ceat Q2 PAT tumbles 81% YoY to Rs 8 cr

The tyre maker's consolidated net profit slumped 81.3% to Rs 7.83 crore in Q2 FY23 as against Rs 41.98 crore recorded in Q2 FY22.

Revenue from operations jumped 18.1% to Rs 2,894.48 crore in quarter ended 30 September 2022 from Rs 2,451.76 crore posted in the same period a year ago.

Consolidated profit before exceptional items stood at Rs 40.71 crore in Q2 FY23, declining 29.89% from Rs 58.07 crore reported in Q2 FY22. The company recorded exceptional items of Rs 23.7 crore in Q2 FY23.

EBITDA declined 9.6% to Rs 203.8 crore in Q2 FY23 as against Rs 225.5 crore posted in Q2 FY22. EBITDA margin decreased to 7% in Q2 FY23 as compared with 9.2% recorded in the corresponding quarter previous year.

Total expenses rose 19.26% year on year to Rs 2,864.18 in Q2 FY23. Cost of materials consumed stood at Rs 2,001.74 crore (up 23.82% YoY) and finance cost was at Rs 57.72 crore (up 16.44% YoY), during the period under review.

Commenting on the results as well as on the outlook of the business, Anant Goenka, managing director, CEAT, said, The domestic market continues to witness an uptick in demand, which has led to strong growth in the OEM segment. During the quarter, we made price adjustments in the 2-wheeler segment, which has positively impacted our margins. Internationally, we are beginning to see some headwinds in developed markets. Going forward, we expect the second half of this year to be better in terms of revenue and margins because of improving domestic demand and stabilising commodity prices.

Kumar Subbiah, CFO of CEAT, said, There have been some corrections in the commodity prices recently, and if the trend continues, we expect it to positively impact the business in the coming quarters. We continued to keep tight control on cashflows and costs during the quarter. Our consolidated net debt has increased by Rs 197 crore during the quarter largely due to capex and movement in working capital.

Meanwhile, the company's board has approved an additional investment by way of capex of approximately Rs 396 crore, to enhance the capacity of farm radial tyres at the Ambarnath plant of the company, by 55 tons per day (TPD) capacity over a period of next two years. The investment is proposed to be funded through a mix of debt and internal accruals.

Ceat is an Indian multinational tyre manufacturing company owned by the RPG Group.

Shares of Ceat gained 2.83% to settle at Rs 1,614.75 on Monday, 7 November 2022.

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