CEAT logs near 16-fold jump in profit in Q1 on higher demand, fall in costs

BENGALURU (Reuters) - Indian tyremaker CEAT posted a near 16-fold jump in profit boosted by strong demand and drop in raw material costs.

The Mumbai-based company's consolidated net profit rose to 1.45 billion rupees ($17.71 million) from 92.5 million rupees a year earlier.

Analysts, on average, expected a profit of 1.28 billion rupees, according to Refinitiv IBES data.

Revenue rose 4.1% to 29.35 billion rupees, while total expenses fell 2.8%, led by a 14.3% drop in the cost of materials consumed.

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KEY CONTEXT

Domestic two-wheeler volumes rose by about 10% year-on-year during the quarter due to healthy demand in both urban and rural areas, while the medium and commercial vehicles industry also grew about 6%, said research firm Nuvama. Domestic passenger vehicle segment volumes also grew about 10%.

The domestic tyre market is projected to grow at a CAGR of 7%-9% between CY20-24, according to CEAT's annual report.

CEAT in FY2023 reported a 21% rise in revenue, despite facing global headwinds due to the Ukraine crisis as well as the devaluation of the Indian rupee.

Rivals MRF, JK Tyre and Apollo Tyres are yet to report their earnings for the quarter.

PEER COMPARISON

Valuation Estimates (next 12 Analysts' sentiment

(next 12 months)

months)

RIC PE EV/EBI Revenue Profit Mean # of Stock to Div

TDA growth growth rating* analysts price yield

target** (%)

CEAT Ltd CEAT.NS 18.89 8.30 7.71 72.68 Buy 15 1.26 0.12

MRF Ltd MRF.NS 26.41 12.27 9.32 57.45 Sell 8 1.23 0.17

JK Tyre & JKIN.NS 10.53 6.26 9.35 45.28 Sell 2 1.37 0.82

Industries

Ltd

Apollo APLO.NS 15.64 7.61 7.99 36.89 Buy 28 1.02 0.96

Tyres Ltd

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

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

APRIL-JUNE STOCK PERFORMANCE OF CEAT VS PEERS

-- All data from Refinitiv

-- $1 = 81.8534 rupees

 

(Reporting by Ashish Chandra in Bengaluru; Editing by Sohini Goswami)