Last Updated : Feb 12, 2018 08:53 PM IST | Source:

Buy CEAT; target of Rs 1994: Chola Securities

Chola Securities is bullish on CEAT has recommended buy rating on the stock with a target price of Rs 1994 in its research report dated February 05, 2018.

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Chola Securities' research report on CEAT

CEAT, part of the RPG group, is one among the top four tire manufacturers in India with a total manufacturing capacity of >1000 MT/day & manufacturing plants situated in Nashik, Bhandup (Mumbai),Ambernath, Halol, and Gujarat, the company manufactures all tires: Truck & Bus (33%), 2W/3W (32%), Passenger vehicles (14%), LCV (12%), Off Highway (12%). In terms of market, replacement contributed 62% of the sales while OEM and exports make up 26% and 12% of the sales, respectively. CEAT has a robust distribution network consisting of over 4,500 dealers, 33 regional offices and more than 500+ C&F agents. CEAT commands >12% market share in the T&B segment, 7% in the Passenger car segment, 16% in LCV segment and 22% in the 2/3W segment.


We introduce FY20 estimates (Revenue/EPS: +11.4%/+13% YoY) and roll over valuations on FY20 estimates. At CMP, the stock is trading at P/E of 14.7X/13x on FY19E/FY20E EPS, respectively. We arrive at a revised price target of INR 1,994 based on P/E of 16x FY20EPS and maintain BUY rating on the stock. Risks: Further increase in rubber & crude prices can negatively impact margins.

For all recommendations report, click here

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First Published on Feb 5, 2018 08:47 pm
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