Emkay Global Financial's research report on CEAT
CEAT reported a strong Q4; revenue growth accelerated to 14% (9M: 9.5%). EBITDAM expanded by 100bps QoQ on 64bps higher gross margins (9% beat on consensus EBITDA). CEAT expects the healthy growth to continue in FY26 (on rural-led growth in 2Ws and single-digit growth in PVs/CVs and largely stable exports); the recent RM decline to benefit margins from late-Q1 (CEAT indicated comfort at +40% gross margin level vs 37.5% now; it would uphold current pricing in a falling RM price scenario). We like CEAT given its superior growth prospects led by higher exposure to consumer-facing categories and ongoing market share gains, with potentially strong margin revival ahead if RM sustains. We upgrade FY26E/FY27E EPS by 8%/5% on accelerating growth, and recent RM decline.
Outlook
We retain BUY (Read: Emerging 'consumer' leader; bestplaced to resist RM volatility); raise our TP by 5% to Rs 4,100 at 18x FY27E EPS.
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