Buy Ceat, target Rs 1750: Reliance Securities

Reliance Securities has a buy call on Ceat Ltd. with a target price of Rs 1750. The current market price of Ceat Ltd. is Rs 1424.85.
Time period given by the brokerage is a year when Ceat Ltd. price can reach defined target. Ceat Ltd., incorporated in 1958, is a mid cap company with a market cap of Rs 5799.94 Crore) operating in Tyres sector.

Investment rationale by Reliance Securities
Looking ahead, we expect CEAT to witness a healthy traction over next two years on account of new capacities, favourable product-mix, sound distribution reach and strengthening brand equity. On the flip side, likely spike in input prices from 1QFY19 (as guided by the Management) led by recent surge in crude prices along with addition of large debts in B/S due to high capex in FY19E may prove to be major headwinds for CEAT in term. In view of healthy business prospects, good management capability and valuation comfort post recent price correction, we maintain our BUY recommendation on the stock with a revised Target Price of Rs1,750 (from Rs1,850 earlier).