Emkay's research report on CEAT
CEAT logged a healthy Q1 with 10.5% revenue growth led by 9%/1.5% volume/realization growth; overall vol growth was driven by a mid-20s/single-digit growth in OEM/replacement; realization was mostly muted due to headwinds for international business. The mgmt guides to sustained double-digit growth in FY26, led by replacement (continued higher growth in 2Ws/CVs; market share gains in the high margin +17inch PCR, 150cc+ motorcycles), and OEMs (rising wallet share, market share across categories). The mgmt expects margin uptick in Q2FY26, aided by a) 1-2% potential drop in RM costs (vs earlier estimate of flat costs in Q2); b) continued pricing discipline. Camso would be consolidated from Sep-25 (not built-in). We believe CEAT stands out on its superior growth visibility, led by high exposure to consumer-facing categories (2Ws/PVs) and sustained share gains (in OEMs, replacement). The demand and margin cycle for the tyre industry is turning positive, and margin revival looks promising.
Outlook
To reflect such developments and our positive stance on CEAT, we hoist our TP by ~12% to Rs4,600 at 20x Jun-27E PER (18x earlier); retain BUY.
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