Tyre maker Ceat reported a marginal increase in its consolidated net profit at Rs 52.5 crore for the December quarter. The company had posted a profit of Rs 52.25 crore in the same period a year ago, Ceat said in a regulatory filing.
Revenue from operations during the quarter under review stood at Rs 1,761.77 crore as against Rs 1,729.75 crore in the year-ago period, it added.
Its earnings before interest, tax, depreciation and amortisation grew by 27 percent year-on-year to Rs 182.3 crore in Q3FY20, and margin expanded to 10.3 percent (from 8.2 percent YoY) due to fall in rubber prices.
Here are key highlights from Ceat's conference call by Narnolia Financial Advisors:
According to the Ceat management, the passenger car segment has shown high single-digit growth while 2-wheeler and commercial vehicles have posted declines in double digits. OEM segment has declined while replacement remained flat to positive. The company is witnessing 25-30 percent YoY growth in TBR tyres and going ahead it is expected to grow at 20 percent YoY.
Exports revenue has grown by low single digit and expected to grow in the range of 5-10 percent going ahead. Management expects that the industry has already seen the worse but not sure about recovery in the near future. The overall gross margin is expected to remain at similar level of 41-42 percent based on stable commodity prices.
Depreciation and interest cost will increase due to new capacities coming in from Q4 FY20. The passenger car plant in Chennai and 2-wheeler tyre plant in Nagpur, the management added.
The company spent Rs 1900 crore out of Rs 3,500 crore of total capex. The overall capex guidance has been curtailed by Rs 500 crore to Rs 3,000 crore to be spent by FY22. The capex guidance for FY21 is Rs 800-1000 crore on standalone basis and for specialty business is yet to be figured out, Ceat's management said.
Ceat has 5-6 percent of market share in TBR tyres and 27-28 percent market share in 2-wheeler tyres. The tax rate will remain same as previous year for FY20. Management does not see any pricing pressure due to competition. Export remains a big opportunity in terms of PCR tyres and hence the management will focus onto increase its distribution network in the European market.
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