Add Ceat, target price Rs 1540: ICICI Securities
Ceat Ltd., incorporated in the year 1958, is a Mid Cap company (having a market cap of Rs 5582.11 Crore) operating in Tyres sector.
By ETMarkets.com | Updated:
Agencies
ICICI Securities has add call on Ceat with a target price of Rs 1540. The current market price of Ceat is Rs 1371.8.
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 5582.11 Crore) operating in Tyres sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 1910.28 Crore, down -16.69 % from last quarter Total Income of Rs 2292.89 Crore and up 70.11 % from last year same quarter Total Income of Rs 1122.98 Crore. Company reported net profit after tax of Rs 16.05 Crore in latest quarter.
Investment Rationale
CEAT’s Q1FY22 performance was in-line with consensus expectations, PAT declined ~86% QoQ mainly due to gross margin compression (down 315 bps QoQ). Revenue growth continues to be led by organic growth in CV/PV segments coupled with new order wins across both new and existing customers (e.g. Nissan magnate, Mahindra Thar). Outlook for H2FY22 remains mixed due to worries on potential demand slowdown due to covid 3rd wave and chip shortages led delays. However, margins are likely to improve in H2FY22 as inputs costs have started to moderate downwards (Bangkok rubber prices down >15% since Jun’21). On balance sheet side, consolidated debt rose to ~Rs17.8bn (FY21: ~Rs14.2bn). CEAT’s capex intensity is likely to peak in FY22, the brokerage expects FCF generation to improve in FY23E (~Rs3bn /~5% FCF yield).
Promoter/FII Holdings
Promoters held 46.8 per cent stake in the company as of June 30, 2021, while FIIs held 24.4 per cent, DIIs 13.3 per cent and public and others 15.5 per cent.
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 5582.11 Crore) operating in Tyres sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 1910.28 Crore, down -16.69 % from last quarter Total Income of Rs 2292.89 Crore and up 70.11 % from last year same quarter Total Income of Rs 1122.98 Crore. Company reported net profit after tax of Rs 16.05 Crore in latest quarter.
Investment Rationale
CEAT’s Q1FY22 performance was in-line with consensus expectations, PAT declined ~86% QoQ mainly due to gross margin compression (down 315 bps QoQ). Revenue growth continues to be led by organic growth in CV/PV segments coupled with new order wins across both new and existing customers (e.g. Nissan magnate, Mahindra Thar). Outlook for H2FY22 remains mixed due to worries on potential demand slowdown due to covid 3rd wave and chip shortages led delays. However, margins are likely to improve in H2FY22 as inputs costs have started to moderate downwards (Bangkok rubber prices down >15% since Jun’21). On balance sheet side, consolidated debt rose to ~Rs17.8bn (FY21: ~Rs14.2bn). CEAT’s capex intensity is likely to peak in FY22, the brokerage expects FCF generation to improve in FY23E (~Rs3bn /~5% FCF yield).
Promoter/FII Holdings
Promoters held 46.8 per cent stake in the company as of June 30, 2021, while FIIs held 24.4 per cent, DIIs 13.3 per cent and public and others 15.5 per cent.
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