Reduce Ceat, target price Rs 1377: ICICI Securities

ICICI Securities has reduce call on Ceat Ltd. with a target price of Rs 1377. The current market price of Ceat Ltd. is Rs 1622.85.

Ceat Ltd., incorporated in the year 1958, is a Mid Cap company (having a market cap of Rs 6539.57 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 30-09-2022, the company reported a Consolidated Total Income of Rs 2904.25 Crore, up 2.95 % from last quarter Total Income of Rs 2821.14 Crore and up 18.32 % from last year same quarter Total Income of Rs 2454.52 Crore. Company reported net profit after tax of Rs 5.80 Crore in latest quarter.

Investment Rationale
The brokerage believes with RM costs stabilising finally, investment in OHT and radial segments bodes well towards CEAT’s strategic intent to focus on improving RoCE from present lows as against investing heavily in TBRs. It downgrades the stock to REDUCE from Hold with DCF-based TP of Rs1,377 (earlier: Rs1,271), implying ~12x FY24E earnings.

Promoter/FII Holdings
Promoters held 47.21 per cent stake in the company as of 30-Sep-2022, while FIIs owned 22.45 per cent, DIIs 11.69 per cent.