Accumulate CEAT; target of Rs 1444: Dolat Capital Market

Dolat Capital Market recommended accumulate rating on CEAT with a target price of Rs 1444 in its research report dated January 20, 2021.

Broker Research

January 27, 2021 / 15:05 IST

26 Aug, 2025 12:21

Volume

Todays L/H

Dolat Capital Market's research report on CEAT

CEAT posted impressive numbers in Q3FY21 driven by 1) strong revenue traction in replacement market (+35% YoY) led by pick up in fleet utilization, market share gain in PCR and TBR segment and ban on import of Chinese tyres; 2) better product mix (high proportion of replacement volume) and 3) cost cutting measures. Revenue grew 26% YoY and EBITDA jumped 79% YoY to Rs 3.28bn. EBITDA margin stood at 14.8% (+435bps YoY, flat QoQ). The management expects RM cost to increase by 10% in 4Q, the company has taken cumulative price hike of ~3% recently while another 3% price hike is required further to mitigate the impact of increase in input cost. We maintain our positive view on the stock, premised on 1) uptick in OEMs volume and market share gain in PCR and TBR segments; 2) continued replacement market growth; 3) Strong FCF generation from FY23 onwards and 4) cost optimization measures.

Outlook

We increase our EPS estimates by 23/16% for FY22/23E and maintain an Accumulate rating with TP of Rs 1,444 (based on 15x FY23E Cons EPS).

For all recommendations report, click here