 "CEAT")
RPG Group-owned tyre company, Ceat, posted a more than 5-fold year-on-year (Y-o-Y) increase in profit after tax (PAT) during the third quarter of the financial year 2023-24, concluded on 31 December, reaching Rs 181.48 crore. The company had experienced margin pressure due to a steep increase in raw material prices in past quarters. Ceat's revenue from operations rose by 8.6 per cent Y-o-Y to Rs 2,963.14 crore.
Kumar Subbiah, Chief Financial Officer of Ceat, stated, “The increase in PAT by approximately 412 per cent during the third quarter is because in the previous year's first three quarters, Ceat experienced margin pressure due to a steep increase in raw material prices, leading to lower margins in Q3FY24. In the current year, Ceat witnessed volume growth of 8.8 per cent, and raw material costs decreased, resulting in improved gross margins and, consequently, a surge in PAT.”
On a sequential basis, the company exhibited a 2.95 per cent decline in revenue, along with PAT, which also declined by 12.78 per cent.
Ceat's share price rose by 4.34 per cent, ending the day's trade at Rs 2,875 apiece on the BSE.
Commenting on the results, Arnab Banerjee, Managing Director & Chief Executive Officer of Ceat, stated, “Replacement and International business reflected strong growth on Y-o-Y basis. While margins for the quarter were healthy, we witnessed a marginal drop primarily on account of an increase in input cost. With stronger growth in premium segments in the domestic market and recovery in international markets, we expect stronger growth in the forthcoming quarters.”
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The revenue growth was particularly fuelled by the replacement and international markets. The international business saw an increase of close to 20 per cent, while the replacement market witnessed a growth of around 8 per cent. The Original Equipment Manufacturer (OEM) segment, however, remained flat during this period.
In the next quarter, Ceat plans to launch truck and bus radial and passenger car radial tyres in the US market in the replacement market.
Ceat also plans to provide tyres for every motorcycle segment as they have witnessed strong demand in the motorcycle sector - both the OEM segment and the replacement market.
“While we have been a key player in various motorcycle segments, our recent entry into the premium and high-end motorcycle category, particularly with steel radial tyres, addresses a gap in our product offerings. Previously, we were present in fabric radial tyres but lacked a presence in steel radial variants, which are predominantly imported by users of high-end vehicles. This strategic move allows us to tap into the high-end motorcycle market, recognised for its premium characteristics. By offering steel radial tyres, we aim to cater to the premium segment and encourage both original equipment manufacturers and replacement users to choose our products over imports, thus strengthening our position in the premium market,” Subbiah further added.
