Latest news with #CEATLtd
Mint
28-05-2025
- Automotive
- Mint
Trump tariff threat: CEAT figures out ways to salvage its $225mn Camso acquisition
NEW DELHI : Tyre maker CEAT Ltd will shift production for the US market to its Indian facilities from Sri Lanka to salvage its biggest acquisition, Canadian tyre brand Camso, in case US President Donald Trump decides to go ahead with his plan to impose higher reciprocal tariffs. 'We are in talks with the Sri Lankan government. There is hope that the situation will be resolved. However, we have our mitigation strategies in place in case trade deals do not materialise," Arnab Banerjee, managing director and chief executive, CEAT, told Mint. India's fourth-largest tyre player acquired Camso, which gets nearly one-third of its business from the US, in December 2024 for $225 million (about ₹1,900 crore) in an all-cash deal from France-based Michelin group. In 2023, Camso posted a revenue of $213 million. Also Read: In US-China trade war, Indian tyre makers could be collateral damage The acquisition gave the RPG Group flagship control over its two manufacturing facilities in Sri Lanka and over 40 global OEMs, including those in the US. However, Trump's 2 April announcement to impose 44% reciprocal tariffs on Sri Lanka soured the deal for the Mumbai-based company. Though the US administration has paused the implementation of higher tariffs till 9 July, the impending threat has pushed the company back to the drawing board. 'At present, we do not have much exposure to the US. However, the country is an identified growth market for us," Banerjee added. The threat Analysts have warned that the Camso acquisition will become a problem for the company if the Trump administration pursues the plan, and it will be key to watch CEAT's mitigation strategies. The proposed tariffs will increase import costs for US tyre customers, which can shift demand to manufacturers with plants in the North American region or those in countries that strike trade deals with the US. 'If the tariff situation prevails, there can be significant risk to 15% of the overall volumes (US bias tires) for the company (Camso)," wrote Rishi Vora of Kotak Institutional Equities, in a 1 May note. 'In that case, the rationale for the transaction becomes difficult to justify." Also Read: Rubber barons: These small caps make a fortune from discarded tyres. Should you invest? In 2024-2025, the tyre maker's net profit declined by 26% to ₹471 crore, while its revenue grew by 10% to ₹13,217 crore. Its share price has risen by 17.88% since the beginning of 2025, as against a 2% rise in the Nifty Auto. The contingency plan The North American market is a key destination for the Indian tyre industry, accounting for about one-fifth of its nearly $3 billion exports in 2023-24. Europe and Latin America are also key destinations. In 2024-25, CEAT got about 19% of its ₹13,217 crore revenue from exports, with its major markets in Latin America and Europe. However, the management set its sights on the world's largest tyre market in 2024. 'CEAT has entered twelve new geographies in the fiscal year with plans to enter the world's largest tyre market, the US, in 2025. This expansion underscores our capability to produce the best-in-class products to meet global requirements," the company's vice chairman, Anant Goenka, said in his letter to shareholders in 2024. Now, to salvage that ambition, one of its mitigation strategies involves the company shifting the production of tyres for the US market from Camso's plants in Sri Lanka to its Indian facilities, while the Sri Lankan plants will produce tyres for the European market. As of now, India, where CEAT has six manufacturing plants with a capacity of producing more than 140,000 tyres every day, stands to attract reciprocal tariffs of 26% on the goods it exports to the US. Tyre exports Overall, the international markets constitute a large share of India's top tyre makers. While Apollo Tyres Ltd earned around 13% of its revenue from exports in 2023-24, international sales accounted for nearly three-fourths of Balkrishna Industries Ltd's top line. India's largest tyre player, MRF Ltd, earned about 8% of its revenue from exports. For the broader auto ancillary sector, including auto parts makers, exports to the US contributed one-third of the total $21 billion exports in 2023-24. Also Read: Can Camso transform tyre maker Ceat into a high-margin business? Sona Comstar, which gets more than 40% of its revenue from the North American market, highlighted in its earnings call on 30 April that 3% of its revenue can be impacted due to Trump tariffs.
New Indian Express
30-04-2025
- Automotive
- New Indian Express
CEAT targets double-digit growth in FY26; Plans ₹1,000 crore capex
Despite macroeconomic and global challenges affecting the tyre industry, India's leading tyre manufacturer CEAT Ltd expects a double-digit growth in revenue in FY2025-26. 'In the fiscal and the quarter (Q4FY25) gone by, we delivered double-digit growth. We would have grown higher than the industry in FY25. While there are some macroeconomic challenges like the US tariff, we are again targeting double-digit growth in FY26,' Kumar Subbiah, CFO of CEAT, told The New Indian Express . The company reported a 14.3% year-on-year rise in Q4 revenue to ₹3,420.6 crore, up from ₹2,991.9 crore in the same quarter last year. However, net profit declined 8.4% to ₹99.5 crore compared to ₹108.6 crore in Q4 FY24. Despite this, CEAT's shares surged 8% on Wednesday, reflecting investor optimism. Subbiah highlighted strong growth in the replacement market (55% of revenue) and international business (20% of revenue) last fiscal. The company aims to increase its overseas revenue share to 25% in the next two years. For FY26, CEAT has earmarked ₹900-1,000 crore in capital expenditure, primarily for expanding passenger car tyre and truck/bus radial tyre capacities. This follows last year's capex of ₹946 crore. On US tariff concerns, Subbiah noted that CEAT's exposure to the US market is below 5%, minimizing potential risks. However, he cautioned that the industry must monitor whether China increases tyre dumping in global markets. 'In India, we have antidumping duty, particularly in the truck and bus radial category. As far as the Indian market is concerned, we do not see a threat of dumping. However, if Chinese tyres flood into other markets where we are also competing, then we will have to assess the impact,' he said. Talking about softening raw material prices, the CFO said that crude oil prices are currently hovering at about $65 level and international natural rubber prices, even though higher than last year, has seen a correction of about 10% in recent months. 'The impact of softening raw material prices may be seen in the coming months,' he stated.
Business Upturn
30-04-2025
- Automotive
- Business Upturn
CEAT shares climb over 6% today as Q4 revenue beats estimates
Shares of CEAT Ltd jumped over 6% on Tuesday to Rs 3249.60 after the tyre maker posted better-than-expected revenue growth for the quarter ended March 2025. Despite a year-on-year decline of 8.4% in net profit to Rs 99.5 crore, the company's robust top-line performance impressed investors. CEAT had reported a net profit of Rs 108.6 crore in the same quarter last year. Revenue from operations grew 14.3% year-on-year to Rs 3,420.6 crore, up from Rs 2,991.9 crore in Q4 FY24, supported by strong demand across automotive segments. However, operating profit was slightly lower, with EBITDA coming in at Rs 388 crore, down 0.9% from Rs 391.7 crore. Operating margins contracted to 11.3% from 13.1% a year earlier, largely due to rising input costs and product mix changes. The company's Board of Directors has recommended a dividend of Rs 30 per share (300% of face value) for FY25, subject to shareholder approval at the upcoming AGM. As of 10:22 AM, CEAT shares were trading at Rs 3249.60, up nearly Rs 200 from the previous close of Rs 3,060.40, taking the market capitalization to Rs 12,801 crore. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
