Buy CEAT; target of Rs 2091: LKP Research

LKP Research is bullish on CEAT has recommended buy rating on the stock with a target price of Rs 2091 in its research report dated May 08, 2023.

Broker Research

May 09, 2023 / 14:27 IST

Buy

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LKP Research's research report on CEAT

CEAT posted robust performance in Q4. Going forward, CEAT is expected to improve performance in both OEM and replacement demand aided by increase in the capacity. Export market is expected to show upticks in the coming quarters and rising demand in its underlying segments. CEAT is well placed to improve the market standing with strong brand equity developed over the last decade and improving its product portfolio targeting premium vehicle segments and new markets like EV tyre. Going forward, we expect the margin profile to stabilize ~12% levels with cost control measures and better operating leverage. We believe the company is in the right direction to improve the market share in PCR/TBR tyres and expect CEAT to outperform the industry. With outlook of reduced capex, dipping financial leverage, improving return ratios and positive FCF, we remain sanguine on the stock.

Outlook

At CMP, the stock is trading at 11.5x FY25E. We assign a target multiple of 14x to value to the stock with a target price of ₹2,091. Maintain BUY.

For all recommendations report, click here