Buy CEAT; target of Rs 3818: Motilal Oswal

Motilal Oswal's research report on CEAT

Ceat Ltd (CEAT)’s 4QFY25 performance was ahead of estimates as it posted 100bp margin expansion QoQ to 11.3% (vs. an estimate of 10.5%) led by a marginal reduction in input costs and price hikes taken in Q4. Management expects the international mix to improve to 26% from ~19% currently, fueled by the Camso acquisition, focus on OHT, and expanded distribution, especially in the US. This is not just expected to drive healthy growth but should also bode well for its overall profitability. CEAT’s focus on strategic areas such as PVs/2Ws/OHT/exports (to help margins), along with prudent capex plans (to benefit FCF), should continue to improve its returns in the long run.

Outlook

We reiterate our BUY rating on the stock with a TP of INR 3,818 (based on ~18x FY27E EPS).

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