Buy CEAT; target of Rs 2000: Motilal Oswal

Buy

Motilal Oswal's research report on CEAT

CEAT’s healthy 4QFY23 performance was driven by the margin expansion due to lower RM costs (despite high other costs). We believe 4QFY23 EBITDA margin of 12.8% largely factor in the benefits of commodity softening (decline 8-9% QoQ in 4QFY23) and price hikes. This coupled with increase NR prices of late should keep margin range bound around 12%.

Outlook

We raise our FY24E/FY25E EPS by 10% each to largely account for better gross margins. Maintain BUY with a TP of INR2,000 (based on ~13x Mar’25E EPS).

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CEAT - 08 -05 - 2023 - moti