Motilal Oswal 's research report on CEAT
CEAT’s 1QFY21 performance was driven by replacement demand, lower RM cost and cost control efforts. While near-term operating performance would be driven by favorable mix and cost, strong volume recovery is key for CEAT to benefit from new capacities. We are maintaining consol. EPS estimates for FY21 but have lowered it for FY22E to factor in the higher interest cost.
Maintain Buy. Valuations at 13.4x/11.2x FY21/22E consol. EPS does not fully capture the benefit of substantial capacity addition. Maintain Buy with TP of ~INR1,038.
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