Buy CEAT; target of Rs 2375: Motilal Oswal

Motilal Oswal is bullish on CEAT recommended buy rating on the stock with a target price of Rs 2375 in its research report dated June 15, 2023.

Broker Research

June 16, 2023 / 14:30 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on CEAT

CEAT expects 2W replacement demand to be flat and start picking up after 2-3 quarters. It expects high single-digit growth for PV/CV replacement. OE demand is healthy, with 2W OE demand likely to have bottomed out. The company has a marginal presence in the southern regions, hence it will focus on gaining market share in the region. In 2Ws, its market share increased to 28% in FY23 from 26% in FY19, aided by its expansive distribution network. Going forward, the company plans to cover all niche segments, such as adventure biking, Moto GP version, etc. CEAT charges 2-3% premium vs next peer. In PVs, its market share expanded to ~15% in FY23 from ~11% in FY19. However, it is still 3-4% lower than the market leader. The company aims for market leadership in the category by achieving a market share of 18-19% by FY26. In SUVs, its market share is 20-25%. Tyres larger than 15 inches will have a 20–25% greater realization than smaller sizes. The company inidcated scope of price premium of 1-2% in PV category. In TBR, the company currently has a market share of 7% and aims to achieve ~11-12% by FY26. There is scope for improvement in tyre prices as they are below the competition. CEAT is working on improving the product’s life cycle by ~10%, which should help it get better pricing.

Outlook

Valuations at 14.8x/12x FY24E/FY25E consol. EPS do not fully capture the rampup of new capacities and lower RM costs. Maintain BUY with a TP of INR2,375 (roll fwd to ~13x Jun’25E EPS).

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