Buy Ceat, target price Rs 1425: JM Financial

JM Financial has buy call on Ceat with a target price of Rs 1425. The current market price of Ceat Ltd. is Rs 935.5 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 3782.08 Crore) operating in Tyres sector.

Ceat Ltd. key Products/Revenue Segments include Automobile Tubes, Other Operating Revenue, Scrap, Royalty Income, Others for the year ending 31-Mar-2022.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2595.28 Crore, up 7.40 % from last quarter Total Income of Rs 2416.44 Crore and up 13.19 % from last year same quarter Total Income of Rs 2292.89 Crore. Company reported net profit after tax of Rs 17.76 Crore in latest quarter.

Investment Rationale
CEAT is currently trading at 9x PE multiple. It ascribes a 14x PE multiple to arrive at a TP of INR 1,425. Inability to take further price hike, weakness in replacement sales and further increase in RM cost are key risk.

Promoter/FII Holdings
Promoters held 47.11 per cent stake in the company as of 31-Mar-2022, while FIIs owned 22.66 per cent, DIIs 11.67 per cent.