CLSA sees margin upcycle for Ceat, maintains ‘Outperform' call with Rs 3,933 target price
By Markets Desk Published on June 4, 2025, 07:59 IST
CLSA has reiterated its Outperform rating on Ceat with a target price of ₹3,933, citing positive near-term drivers including margin revival and the strategic Camso acquisition.
The brokerage said that Camso integration and an overall margin revival are key focus areas for the company in the near term. Ceat also expects to gain market share in the high-value TBR (Truck & Bus Radial) replacement market.
The Camso deal, now completed, carries a $1.2 billion revenue potential over the next three years, according to CLSA. In addition, Ceat is currently in a margin upcycle, benefiting from the softening of raw material prices, which should contribute 200–300 basis points of margin expansion in FY26.
CLSA believes the combination of a stronger product mix, synergy gains from Camso, and improving margins positions Ceat well for sustained outperformance in the coming quarters.
Disclaimer: The views and target prices mentioned in this article are as stated by CLSA. They do not represent the opinions or recommendations of this publication. Readers are advised to consult their financial advisors before making any investment decisions.
Markets Desk at BusinessUpturn.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Upturn
14 hours ago
- Business Upturn
CLSA upbeat on Bajaj Auto's growth plans; maintains ‘Outperform' with Rs 10,149 target price
By Markets Desk Published on June 6, 2025, 08:17 IST CLSA has maintained its Outperform rating on Bajaj Auto with a target price of ₹10,149, following management commentary that reinforced its growth focus across segments. Post its management interaction, CLSA highlighted key takeaways: Bajaj Auto aims to gain market share in the 125cc+ motorcycle segment, via Pulsar model refreshes and potentially new brand launches. It will launch a Chetak e-scooter with 3kWh battery, to deepen its play in electric two-wheelers (e2Ws). The company is confident of 15–20% export volume growth in FY26, driven by LATAM traction and recovering African markets. A turnaround in KTM is targeted by 2026, post its recent restructuring and as Bajaj takes a controlling stake. Bajaj Auto will soon launch an e-rickshaw with Li-ion battery, complementing its current e3W portfolio. CLSA believes these multiple growth drivers position Bajaj Auto for sustained outperformance across domestic and export markets. Disclaimer: The views and target prices mentioned in this article are as stated by CLSA. They do not represent the opinions or recommendations of this publication. Readers are advised to consult their financial advisors before making any investment decisions. Markets Desk at
CNBC
a day ago
- CNBC
CNBC's Inside India newsletter: Wall Street and investors turn bullish on India after two turbulent quarters
Having overcome fears of the India-Pakistan conflict, Indian markets might lose its temporary status as a "safe haven" market if the U.S. and China come to a deal. Those worries and a concoction of other factors — inflation, earnings disappointments — have led to lackluster performance for equities so far this year. The Nifty 50 is up 4.7% so far this year, and investors are likely to have welcomed the sideways move by the benchmark in May with a sigh of relief, in fact. But the tide may be about to turn as Wall Street analysts and investors turn bullish. The Indian market is currently one of the most expensive globally, trading at over 20% premiums to its 20-year average price-to-earnings (P/E) ratio, which limits the potential for significant Nifty benchmark upside, according to analysts at CLSA. "After the recent rally, the Indian market has again inched up to become nearly the most expensive market in the world," said CLSA's Vikash Kumar Jain in a note to clients. Goldman Sachs strategists echoed that point, saying the MSCI India index "does not look favourable" even when adjusting for a stronger growth potential. Wonks over at Morgan Stanley took a similar view of the stock market's recent performance. "Since September 2024, the market has digested an unprecedented amount of bad news – excessive valuations in [small and mid-cap] and a sharp correction in the broad market pointing to a slowdown in macro growth and earnings, US tariff-related volatility and a major terrorist attack along with India's response with the large-cap indexes about 5% from all-time highs and almost negligible changes in implied volumes," said the Wall Street bank's Ridham Desai. Norma analyst Saion Mukherjee also noted that most companies beat expectations for the latest quarter, but only because the expectations had been lowered significantly. Yet, every single one of those market participants has turned bullish over the past couple of weeks. Goldman Sachs raised its price target for the Nifty 50 to 26,200. Nomura similarly sees the index at 26,140. Even long-time cautious bears such as Bernstein's Venugopal Garre, who has been right in cautioning investors over rich valuations in the small and mid-cap sectors (SMID), are now rethinking their outlook. "They've been in a bubble zone for a while — a point we've never hesitated stating," said Garre. "The reality is this: the SMID bubbles have let go of a lot of froth and are broadly valued in line with recent history. Not cheap, and not exorbitant." And it's not just strategists, analysts and advisors turning around. Money managers are also echoing the same sentiment. "A lot of people look at India and have said, 'Gosh, the valuations are enormous,'" said Andrew Dalrymple, chief investment officer at Aubrey Capital Management. "If you took that view, you'd never buy an Indian equity. You would have missed an enormous opportunity in the last five years." Aubrey Global Emerging Markets Strategy, which manages more than $500 million in assets, has 35% of its fund allocated to India, its largest allocation. "We try to reconcile valuation of the price earnings-to-growth ratio, and say when we look at an Indian company, it might nominally have that high P/E but we then say this is justified by price-to-growth ratio, which we try to keep at less than 1.5 times," Dalrymple added. "And that way, we find we have been able to exploit some extremely successful, very, very profitable investment opportunities over the years." Dalrymple's sentiment is also reflected in the data. Foreign institutional investors have been net buyers of Indian equities over the past two months. Yet, it's off a low base, suggesting a significant upside in an ideal scenario. Morgan Stanley's Desai noted that "foreign portfolios positioning is the weakest since we have had the data in 2000, and there are early signs that their view on India is shifting." Amid all the sudden bullishness, however, many investors have learned a thing or two over the past year and are approaching with caution. "This is likely to be a stock pickers' market, in contrast to one driven by top-down or macro factors since the Covid pandemic," Desai said in a note to clients on June 2. Financials, often viewed as a leveraged bet on the future of a nation, appear to be a favorite among many. In the large-cap space, Axis Bank was a top pick for Nomura and Goldman Sachs, with ICICI Bank seen favorably by Morgan Stanley, CLSA and JP Morgan. India's economy expands more than expected. Gross domestic product in the quarter ended March grew 7.4%. That figure's much higher than the 6.7% expected by a Reuters poll of economists and the fastest rate of quarterly expansion for fiscal year 2025, according to government data released Friday. For the full fiscal year, India's economy expanded by 6.5%, in line with the government's February estimate. U.S. authorities are reportedly investigating Adani's companies. Prosecutors from the U.S. Attorney's Office in Brooklyn are looking into whether Gautam Adani's companies have been importing liquefied petroleum gas from Iran into India, according to the Wall Street Journal. A spokesperson for the Adani group "categorially denies" the allegations. Reserve Bank of India expected to cut rates two more times. That's according to Chetan Ahya, chief Asia economist at Morgan Stanley, who said that the RBI should be comfortable with two more rate cuts in the current economic climate because India's "growth conditions will still be reasonable" and inflation is likely to remain below 4%. Air travel by Indian nationals could cause the aviation industry to skyrocket. India is the third-largest air travel market in the world, Air India CEO Campbell Wilson told CNBC's Monica Pitrelli at the World Air Transport Summit over the weekend. "So if Indians start traveling... at the intensity of China, it's going to absolutely explode in volume internationally," Wilson Nifty 50 has stayed absolutely flat, so far this week. The index has risen 4.7% this year. The benchmark 10-year Indian government bond yield moved lower by 3 basis points compared to last week. On CNBC TV this week, Anubhuti Sahay, head of India economics research at Standard Chartered Bank, said that India's fiscal fourth-quarter economic expansion was "much higher than anyone of us expected" because of growth in net indirect taxes. However, that number can "keep on fluctuating" and eventually fade, so India's gross domestic product will likely return to the trend of 6.5%. The bank's full-year forecast for India's financial year 2026 is 6.6%. Meanwhile, APEC President of Marriott International Rajeev Menon said that India is "one of the most strategic markets in the world" for the hotel chain. Menon pointed out that occupancy growth is driven by secondary and tertiary cities as much as demand from bigger cities like New Delhi and Bangalore, which suggests that the India's rising middle class is a revenue opportunity for central bank will announce its interest rate decision Friday, when it is expected to lower rates by 25 basis points to 5.75%, according to LSEG data. The country will also be releasing data on its consumer inflation rate for May next Thursday. Meanwhile, Ganga Bath Fittings, a manufacturer of bathroom accessories, lists Wednesday. June 6: Reserve Bank of India interest rate decision June 11: Ganga Bath Fittings IPO June 12: India consumer price index for May
Motor Trend
a day ago
- Motor Trend
It's Official: The Hemi-Powered Ram 1500 Is Back!
'We got it wrong and we're fixing it,' Ram CEO Tim Kuniskis says. What did Ram get wrong? The truck maker nixed the Hemi V-8 option from the redesigned 2025 Ram 1500, making the more powerful and fuel-efficient but less throaty Hurricane twin-turbo inline-six standard. As for fixing it, the Hemi is indeed returning to the menu for the 2026 model year. Order books are now open and trucks with the V-8 option should be on sale this summer. The Hurricane 3.0-liter twin-turbo I-6 will continue to be the standard engine across the majority of the lineup, while the 5.7-liter Hemi becomes a $1,200 option on most trims. It is a no-charge option on the Limited and Longhorn models that had the high-output Hurricane as standard. When Kuniskis returned to head Ram in December, the first thing he was asked was if he was going to bring the Hemi back for truck buyers upset they no longer had that choice. At the time, Kuniskis said he needed to see the data, to see if the falloff in Ram sales was in fact due to dropping the V-8 or if it was the result of a botched launch of the 2025 Ram 1500, whereby the company struggled to get all the various trims to dealers in a timely manner. One factor was the very same plant was also starting to produce the new version of the Ram heavy duty. Today, Ram retail sales are up (overall sales don't look as healthy because the company deliberately pulled back on rental fleet sales). But the Hemi is coming back. 'Data be damned,' Kuniskis says now. It appears this was Kuniskis's plan from day one. He cut short his retirement on December 9 after only six months. 'On December 10 we kicked off the study on how to bring the Hemi back in the Ram as fast as humanly possible.' This Will Not Be Easy The key problem standing the V-8's way was the 2025 Ram 1500 had a new electrical architecture that was not intended to support the Hemi. The initial feedback was that it would take 18 months. A special team was put together, codenamed F15, led by former SRT chief engineer Darryl Smith. Smith worked some kind of magic, reduced the timeline to six months, and trucks with the 5.7-liter will be in dealerships this summer. There is extra cost involved, but it is nominal. Contracts had to be renegotiated and there are compliance issues, all of which explains the additional $1,200 cost, Kuniskis says. Which Ram Trucks Get the Hemi? The 5.7-liter Hemi V-8 puts out 395 horsepower and 410 lb-ft of torque (the standard output Hurricane I-6 generates 420 hp and 469 lb-ft of torque; the high-output version is good for 540 hp and 521 lb-ft). Towing capacity maxes out at 11,470 pounds and maximum payload capacity is 1,750 pounds. The Hemi will be offered in the 2026 Ram 1500 Tradesman, Big Horn/Lone Star, Express, Warlock, Laramie, Limited, and Longhorn. It will come a bit later to the off-road Rebel, a delay needed to accommodate some of that truck's unique features. And the Hemi, which will feature the eTorque mild hybrid system, will come with the sport exhaust standard. Noticeably absent: the off-road performance RHO and the luxurious Tungsten models, which rely on the higher-performance high-output Hurricane as standard. Could it be added to the RHO later? 'I'm not sure,' Kuniskis says. 'It's a 'for sure' I want to do it, but it's not a 'for sure' that it's a good idea.' And what about a supercharged TRX, the powerful truck that went head-to-head with the Ford F-150 Raptor R until it was discontinued after the 2024 model year? Ram loves vehicles like the TRX but it is a tiny fraction of overall sales. 'Will we ever get back to a TRX? We'll see,' Kuniskis tells us. These are all things Ram is working on, or at least looking at, but Kuniskis is not sure the 5.7-liter provides enough performance to meet customer expectations in these top end models. 'I'm not saying we won't do it, but that's what I am thinking about it right now.' Speaking of the TRX, specifically bringing back the supercharged 6.2-liter Hemi is not a viable option. It is really bad for compliance and yields very few sales, says the Ram boss. Nor is it easy to do because it has never been incorporated into the new Ram 1500 electrical architecture so all electronics and modules and connections are different. The workaround to accommodate the 5.7-liter Hemi is courtesy of the Jeep Wagoneer family, an SUV that uses a version of the same architecture as the body-on-frame trucks but was engineered for the 5.7-liter Hemi with its mild eTorque hybrid system—so no additional calibration was needed. The eTorque system replaces the traditional engine-mounted alternator with a belt-driven motor generator unit. The motor generator unit works with a 48-volt battery pack for stop-start, adding torque in certain driving situations, and regenerative braking. The system enables up to 130 lb.-ft. of torque to be available on initial throttle tip-in. The Jeep became the enabler. 'Instead of going from one architecture to a new architecture, we went to a different version of that same architecture which made it possible to do in six months,' Kuniskis said. 'But putting a 6.2-liter in there would be a whole different animal.' New Day, New Hemi Logo The old Hemi logo will not return. The new one, dubbed the 'Symbol of Protest' is a V-8 engine block with exaggerated exhaust pipes and a Ram's head. The badge will be on all V-8 trucks' front fenders. Kuniskis thinks the take rate for the Hemi will be in the 25 to 40 percent range with dealers ordering probably too many initially. Demand will then level off but stay higher than at Ford, for example, where 25 percent opt for a V-8 in their F-150s. Ram should have a higher take rate because the Hemi is a well-known name and because there are many loyalists who will buy it for the sound alone, he says. 'Nothing beats the cold start of a Hemi,' said Mark Trostle, senior vice president of Mopar and Ram exterior design.
