Motilal Oswal is bullish on CEAT has recommended buy rating on the stock with a target price of Rs 1899 in its research report dated 2 February 2018.
Motilal Oswal's research report on CEAT
3QFY18 revenue rose 12.6% YoY on a like-to-like basis (after netting off excise of INR1,596m from 3QFY17 revenue) to INR15,742m (est. INR16,974m). EBITDA increased 22% YoY to INR1,870m (est. of INR2,054m) from INR1,535m in 3QFY17. EBITDA margin expanded 90bp YoY to 11.9% (est. of 12.1%), driven by 50bp gross margin expansion. Consequently, adj. PAT stood flat YoY at INR833m (est. of INR1,107m).
OutlookHowever, in the near term, it will result in a spike in debt, which will peak in FY20 (estimated ~INR18b). Consequently, we cut our earnings estimate by 27%/21% for FY19E/20E and value the company at 17x FY20E EPS. Maintain Buy with a target price of INR1,899 (15% upside).
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