Buy Ceat, target price Rs 1640: ICICI Direct

ICICI Direct has buy call on Ceat with a target price of Rs 1640. The current market price of Ceat is Rs 1438.65. Time period given by analyst is three month 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 5830.88 Crore) operating in Tyres sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 2292.89 Crore, up 3.04 % from last quarter Total Income of Rs 2225.30 Crore and up 45.40 % from last year same quarter Total Income of Rs 1576.92 Crore. Company reported net profit after tax of Rs 145.20 Crore in latest quarter.


Investment Rationale
The auto ancillary space has regained upward momentum after a couple of months breather. Within auto ancillary, Ceat has relatively underperformed the space. The brokerage expects catch-up activity to be seen in Ceat as it is resolving out of two month’s high (Rs 1430) after forming a higher base above long term 200 day moving average. Hence, it offers a fresh entry opportunity from a medium term perspective. The brokerage expects the stock to inch northward and gradually head towards target of Rs 1660 as it is 80% retracement of February-May 2021 decline (Rs 1763-1269).

Promoter/FII Holdings
Promoters held 46.8 per cent stake in the company as of March 31, 2021, while FIIs held 27 per cent, DIIs 13.7 per cent and public and others 12.6 per cent.