Buy Ceat; target of Rs 2,930: Motilal Oswal

Motilal Oswal's research report on Ceat

CEAT’s 4QFY24 results disappointed despite healthy volume growth in the replacement and exports segments. Margins were hit by higher ad spending and extended producer responsibility (EPR)-related provisions. Management has provided high single-digit volume growth guidance for FY25. We cut our FY25E/FY26E EPS by 14%/8% to factor in higher RM and EPR costs. We reiterate our BUY rating on the stock with a TP of INR 2,930 (based on 15x Mar’26E EPS).

Outlook

Factoring in the rising RM costs and the EPR impact, we cut our FY25E/FY26E EPS by 14%/8%. CEAT’s focus on strategic areas such as PV/2W/OHT/exports (to help margins), along with prudent capex plans (to benefit FCF), should continue to improve its returns in the long run. Valuations, at 16x/13x FY25E/FY26E consol. EPS, also appear attractive. Hence, we reiterate our BUY rating on the stock with a TP of INR 2,930 (based on 15x Mar’26E EPS).