CEAT share plunges 7% as Q3 profit tanks 46%; margin squeezes 380 bps

CEAT's consolidated net profit (Bottomline) plunged 46.5 per cent year-on-year (Y-o-Y) to Rs 97.1 crore in the December quarter of financial year 2025 (Q3FY25), from Rs 181.5 crore in Q3FY24

CEAT share price: Tyre manufacturer CEAT share price plunged as much as 7.11 per cent to hit an intraday low of Rs 2,840 apiece on Thursday, January 16, 2025. 

 

The fall in the CEAT share price came after the company posted a weak set of December quarter (Q3FY25) results. 

 

CEAT’s consolidated net profit (Bottomline) plunged 46.5 per cent year-on-year (Y-o-Y) to Rs 97.1 crore in the December quarter of financial year 2025 (Q3FY25), from Rs 181.5 crore in the December quarter of financial year 2024 (Q3FY24).

 

The tyre maker’s topline, also known as revenue from operations, however, surged 11.4 per cent annually to Rs 3,299.9 crore in Q3FY25, from Rs 2,963.1 crore in Q3FY24. 

 

At the operating front, earnings before interest, tax, depreciation and amortisation (Ebitda) plummeted 18.4 per cent Y-o-Y to Rs 340.9 crore in Q3FY25, from Rs 417.6 crore in Q3FY24. 

 

Consequently, Ebitda margin squeezed 380 basis points (bps) Y-o-Y to 10.3 per cent in Q3FY25, from 14.1 per cent in Q3FY24. 

 

On the Q3 results, Arnab Banerjee, MD & CEO, CEAT, said, “We witnessed a strong year-on-year double digit growth, driven by the replacement segment. While the rising raw material costs have impacted our margins, we progressively passed on part of the increase through price increase in select categories during the quarter. The demand continues to remain stable, and our order book pipeline is robust across all segments. Raw material prices look flattish in Q4 and we expect growth momentum to continue."

 

What do analysts say?

 

ICICI Securities analysts noted that CEAT has guided for a continued inflationary trend in the raw material basket, though at a reduced rate of 1.5 per cent to 2 per cent in Q3 compared to Q2. This would provide room for the company to enhance margins through calibrated price hikes, leading to the expected quarter-over-quarter margin decline. 

 

The company anticipates the raw material basket to remain flat in Q4FY24, with growth momentum expected to persist. A key point to watch is the commentary from other players regarding the bottoming out of the raw material basket in Q3FY25. The company’s topline growth was encouraging, driven by strong performance in replacement and export markets, alongside a recovery in the OEM segment.

 

On the other hand, Motilal Oswal, while maintaining a ‘Buy’ rating and a target price of Rs 3,058, reported that CEAT's net sales grew by 8 per cent Y-o-Y to Rs 3,300 crore, in line with expectations. This was primarily driven by strong volume growth in both replacement and export segments. 

 

The company saw an 11 per cent Y-o-Y increase in revenue to Rs 3,300 crore, benefiting from improved realisations on both Y-o-Y and Q-o-Q bases. However, the gross margin contracted by approximately 450 basis points Y-o-Y and 60 basis points Q-o-Q to 36.8 per cent, mainly due to rising raw material costs. 

 

Consequently, Ebitda declined 18 per cent Y-o-Y to Rs 340 crore, also in line with expectations, with Ebitda margins contracting by 380 basis points Y-o-Y and 60 basis points Q-o-Q to 10.3 per cent. Adjusted PAT came in lower than expected at Rs 86.3 crore, marking a 53 per cent Y-o-Y decline, primarily due to higher-than-anticipated interest costs and taxes.

 

At 10:01 AM, CEAT shares were trading 6.61 per cent lower at Rs 2,855.55 apiece, In comparison, BSE Sensex was trading 0.39 per cent higher at 77,022.56 levels.