Hold CEAT; target of Rs 3240: Prabhudas Lilladher

Prabhudas Lilladher's research report on CEAT

Consolidated revenue increased by 14.3% YoY, driven by healthy volume growth in the replacement and OEM segment. International demand was impacted due to global macro-economic conditions while elevated input cost continued to impact margins as gross margin and EBITDA margin declined by 483bps YoY/174bps YoY respectively. Reported PAT remained flat, impacted by EPR related expenses. In comparison to previous year the performance remains weak, however, sequentially the performance seems to have stabilized because of recovery in OEM demand and flattish input cost.

Outlook

We project revenue/EBITDA/PAT to grow at 16%/23%/29% CAGR over FY25-27E. We maintain our ‘Hold’ rating with a revised target price of Rs 3,240 (previous Rs2,700), valuing it at 16x on its Mar’27E EPS.

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