CEAT shares crash over 7% as Q3 leaves investors disappointed

CEAT shares have tanked nearly 9 percent in the past week.

Shares of Tyre manufacturer CEAT plunged as much as 7.5 percent to Rs 2,825 in morning trade on January 16 after the company reported a 46.5 percent year-on-year decline in net profit to Rs 97.1 crore for the third quarter ended December 31, 2024. According to its regulatory filing, the company posted a net profit of Rs 181.5 crore in the same period last year.

Revenue from operations grew by 11.4 percent to Rs 3,299.9 crore, compared to Rs 2,963.1 crore in Q3 FY24. However, operating performance took a hit, with EBITDA falling 18.3 percent year-on-year to Rs 340.9 crore from Rs 417.5 crore. The EBITDA margin narrowed to 10.3 percent in the quarter, down from 14.1 percent a year ago.

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Arnab Banerjee, MD and CEO, noted that the company achieved robust double-digit growth in the replacement segment. While rising raw material costs pressured margins, some of this was mitigated through price hikes in select categories. He highlighted stable demand and a strong order pipeline, adding that raw material costs are expected to remain flat in the fourth quarter, supporting continued growth momentum.

Kumar Subbiah, CFO, attributed the impact on gross margins to increased raw material costs but emphasized that cost controls and price adjustments helped offset part of the burden. He added that the company incurred Rs 283 crore in capital expenditure during the quarter, fully funded internally, keeping debt levels steady.

CEAT also announced plans to invest Rs 400 crore to expand capacity at its Butibori plant in Nagpur, Maharashtra. The facility, which operates at 90 percent utilization, produces 270 lakh tyres annually. The expansion will boost capacity by 30 percent and is set to be completed by FY2027-28, financed through a mix of debt and internal accruals, in line with the growing demand for two- and three-wheeler tyres.

At about 9:20 am, shares of the company were trading at Rs 2,860, lower by 6.5 percent from the last close on the NSE. CEAT shares have tanked nearly 9 percent in the past week.