What's driven Ceat to hit 4-month high; surge 6% in subdued market? Details

Ceat's gross Margins for the March 2025 quarter improved by 65 bps to 37.5 per cent largely driven by favourable revenue mix and as a result of strong cost controls across the value chain.

Share price of Ceat today: Shares of Ceat hit a four-month high of ₹3,255, surging 6.3 per cent on the BSE in Wednesday’s intra-day trade after the company reported a healthy operational performance for the quarter ended March 2025 (Q4FY25). The stock is quoting at its highest level since December 2024. It had hit a 52-week high of ₹3,581.45 on December 9, 2024.

 

At 10:20 am, Ceat was trading 6 per cent higher at ₹3,252.80. In comparison, the BSE Sensex was up 0.05 per cent at 80,325. The average trading volumes on the counter jumped over two-fold with a combined 300,000 equity shares changing hands on the NSE and BSE.

 

 

Ceat’s Q4 results 

 

Tyre major Ceat reported a healthy performance in Q4FY25 with standalone net sales growing 14.6 per cent year-on-year (YoY) at ₹3,414 crore. Gross Margins for the quarter improved by 65 bps to 37.5 per cent largely driven by favourable revenue mix and as a result of strong cost controls across the value chain. 

 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter was flat on YoY and up 14.8 per cent quarter-on-quarter (QoQ) at ₹395 crore, with Ebitda margins at 11.6 per cent, up ~110 bps QoQ. Profit after tax for the quarter stood at ₹100 crore, down 15.7 per cent YoY; and up 4.6 per cent QoQ.

 

The management said operating margins improved in Q4 by over 120 bps, largely driven by a favourable revenue mix and as a result of strong cost controls across the value chain. The company incurred a capex of ₹946 crore during FY25 largely in capacity additions that would prepare the company well to deliver its growth plans in FY26. 

 

During the quarter, Ceat incurred ₹37 crore towards voluntary separation of employees in one of the company’s high-cost factories as a part of its continuous effort to keep manufacturing units cost competitive. 

 

Brokerage view – ICICI Securities

 

QoQ improvement in gross margins is encouraging with the company ascribing better product mix and realisations as the key reason for it amidst flat raw material basket. It also shared that demand was healthy in the replacement market. This is a positive development for the industry and expects other domestic tyre players to report better numbers on a sequential (QoQ) basis. 

 

Acquisition of Camso brand

 

The company has entered into a definitive agreement on December 6, 2024 with associate companies in the Michelin Group for the acquisition of Camso brand's Off-Highway construction equipment tyre and tracks business, through one or more subsidiaries to be incorporated by the company for the deal valued at $225 million.

 

Camso is a premium brand in construction equipment tyre and tracks with strong equity and market position in EU and North American aftermarket and OE segments. The Camso brand will be permanently assigned to Ceat across categories after a 3-year licensing period. This will expand Ceat’s product portfolio in the high margin Off-Highway Tyres (OHT) and tracks segments, which includes agriculture tyres and tracks, harvester tyres and tracks, power sports tracks and material handling tyres. Michelin will thus exit from the activities related to Compact Line bias tyres and Construction tracks. 

 

Post-Camso acquisition, the initial focus shall be on ramping up capacity and after three years, when the Camso brand rights are assigned, it shall foray into agriculture tracks, harvester tracks and power sport tracks. Ceat’s share of high-margin OHT/exports shall improve from 15 per cent/19 per cent to 25 per cent/26 per cent due to this acquisition. Going forward, a pickup in OHT industry and new products should help in further improving the share of OHT/exports over the medium-term, analysts at Nuvawa Institutional Equities said in the company report.

 

About Ceat

 

Ceat, the flagship company of RPG Enterprises, was established in 1958. Today, Ceat is one of India’s leading tyre manufacturers and has a strong presence in global markets. Ceat produces more than 41 million high-performance tyres, catering to various segments like 2-3 Wheelers, Passenger and Utility Vehicles, Commercial Vehicles and Off-Highway Vehicles.