Prabhudas Lilladher recommended accumulate rating on Ceat with a target price of Rs 1178 in its research report dated January 30, 2019.
Prabhudas Lilladher's research report on Ceat
CEAT's Q3FY19 reported standalone operating margin at 8.3%, down 405bps YoY / 80bps QoQ, was below our expectations of 9.3%. RM costs for the quarter were down 170bp (despite RM/ton up 2% qoq) on account of a finished goods inventory gain of Rs1.84bn. Other expenses for the quarter increased 230bp QoQ (highest ever other expenses in a quarter), owing to higher ad-spends and conversion costs of increase in inventory.
Outlook
we remain cautious on the stock and maintain Accumulate with a target price of Rs1,178, based on 15x Sep'21E.
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