Add Ceat, target price Rs 1273: ICICI Securities

ICICI Securities has add call on Ceat with a target price of Rs 1273. The current market price of Ceat Ltd. is Rs 1120.45.
Time period given by analyst is one year when Ceat Ltd. price can reach defined target.

Ceat Ltd., incorporated in the year 1958, is a Mid Cap company (having a market cap of Rs 4589.06 Crore) operating in Tyres sector.


Ceat Ltd. key Products/Revenue Segments include Automobile Tubes, Scrap, Other Operating Revenue, Royalty Income, Others for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 2416.44 Crore, down -1.55 % from last quarter Total Income of Rs 2454.52 Crore and up 8.59 % from last year same quarter Total Income of Rs 2225.30 Crore. Company reported net profit after tax of Rs -29.07 Crore in latest quarter.

Investment Rationale
The brokerage assigns ADD rating with a target price of Rs1,273, implying ~11x FY24E earnings. We believe from ~6-7% pre-tax RoCE and 0.6x net debt/equity, CEAT needs to showcase the transformation in terms of margin and superior growth, with a focus on better RoCE businesses.

Promoter/FII Holdings
Promoters held 94.22 per cent stake in the company as of 31-Dec-2021, while FIIs owned 45.42 per cent, DIIs 25.44 per cent.