Latest news with #Camso
Business Upturn
7 days ago
- Business
- Business Upturn
Stocks to watch on brokerages on June 4: Godrej CP, M&M, Tata Power, CEAT, cement stocks, Embassy REIT, Brook, Infosys, JSW Steel in focus
Here are key brokerage and fund house recommendations for stocks in focus today: Ceat CLSA : Outperform , target Rs 3,933 Camso integration and overall margin revival are near-term objectives; company expects 200–300 bps margin expansion in FY26; Camso deal offers $1.2 bn revenue potential after 3 years. Nomura : Buy , target Rs 3,945 Focus on growing ahead of industry; steady market share gains in 2W and PCR; OHT mix expected to rise to 25% by H2FY26. Nuvama: Buy, target Rs 3,800 Positive FY26 exports outlook; targeting gains in PCR/TBR segments; building in 14% revenue CAGR and 26% EBITDA CAGR over FY25–27. Bharti Airtel Macquarie: Outperform, target raised to Rs 2,050 Sees effective industry tariff support, improving FCF and RoIC; ARPU projected to rise 11% to Rs 290 by FY27. Tata Motors Nomura: Neutral, target Rs 799 Harrier EV to drive EV penetration; estimates EV penetration at 4%/5% for FY26/27 vs 2.3% in FY25; positioning similar to M&M BEVs. KEC International Nomura: Buy, target Rs 985 Healthy order pipeline at Rs 1.8 lakh crore; domestic T&D segment expected to see healthy growth over next 3–4 years; targeting over Rs 3,000 crore revenue from cables business over next 2 years. Cement stocks (Sector view) Jefferies: Positive sector viewQ4 EBITDA growth strong at 11% YoY and 67% QoQ; expects further pricing recovery in South in Q1; sees sector profitability turnaround in FY26. Top picks: UltraTech, Shree Cement, JK Cement. HSBC : Embassy Office Parks REIT : Buy , target Rs 435 Brookfield REIT : Buy , target Rs 330 Distribution per unit grew strongly, yields at 6–7%; improving occupancies and new asset builds key growth drivers; expecting mid-teen returns again in FY26. Jefferies: Positive view Q4 sector revenue growth at 15% YoY; Bharti remains preferred pick; continued subscriber loss at Vodafone Idea (VIL) seen as positive for Bharti/Jio. Morgan Stanley on Godrej CP , M&M , Tata Power — Overweight (Positive) HSBC on Indian Economy — expects inflation to trend below target; 25 bps rate cut expected. Moody's on Indian Banks — neutral; asset quality to hold, gold loan growth may slow. MS on JSW Steel, ICICI Lombard, Infosys, Tata Motors — already mapped (Neutral / Overweight / Equal Weight). Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers are advised to consult their financial advisors before making any investment decisions.
Business Upturn
7 days ago
- Business
- Business Upturn
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
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.
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Business Standard
06-05-2025
- Business
- Business Standard
RPG group stock zooms 56% from April low; hits all-time high today
Ceat share price today: Shares of RPG Group company, Ceat hit a record high of ₹3,624.05, as they rallied 5.5 per cent on the BSE in Tuesday's intra-day trade on expectations of margin improvement in the upcoming quarters, due to lower crude prices recently. The Ceat stock is quoting higher for the sixth straight trading day, surging 19 per cent during the period, after the company reported its March 2025 quarter (Q4FY25) earnings. The market price of the tyre company has surpassed its previous high of ₹3,598.80 touched on December 9, 2024. It has bounced back 56 per cent from its previous month low of ₹2,322.05, touched on April 7, 2024 on the BSE. Ceat's Q4 result 2025 Tyre major Ceat reported a healthy performance in Q4FY25 with standalone net sales growing 14.6 per cent year-on-year (YoY) at ₹3,414 crore. Gross Margins for the quarter improved by 65 bps to 37.5 per cent, largely driven by favourable revenue mix and as a result of strong cost controls across the value chain. Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter was flat on a YoY basis and up 14.8 per cent quarter-on-quarter (QoQ) at ₹395 crore, while Ebitda margins came in at 11.6 per cent, up ~110 bps QoQ. Profit after tax (PAT) for the quarter stood at ₹100 crore, down 15.7 per cent YoY; and up 4.6 per cent QoQ. On a QoQ basis, volumes in the OEM segment grew significantly, while replacement and export segments were flattish. The management said operating margins improved in Q4 by over 120 bps, largely driven by a favourable revenue mix and as a result of strong cost controls across the value chain. The company incurred a capex of ₹946 crore during FY25 largely in capacity additions that would prepare the company well to deliver its growth plans in FY26. Declares 300% dividend for FY25 The board has recommended a dividend of ₹30, i.e. 300 per cent per equity share of face value of ₹10 each fully paid up, for FY2024-25, subject to approval of shareholders at the ensuing Annual General Meeting, which will be paid/ dispatched within 30 days of such approval. ALSO READ | M&M rallies 8% in 2 days, nears record high. Should you buy, hold or sell? Tariff impact on Camso and international business As per the management, Ceat's exposure to the US (ex of Camso) is in the low single digits. For Camso, about 30 per cent of its business exports to the US are from Sri Lanka. Of this, 15 per cent of exposure comes from tracks and 15 per cent from tyres. Sri Lanka has imposed a 44 per cent reciprocal tariff on tyre imports to the US. While the reciprocal tariff has now been postponed by 90 days, given the ongoing dialogues with trading partners and global OEMs, management is confident that it would hear some positive solution on this front for the industry. However, track imports to the US attract about 4 per cent duty only. Tracks are about 50 per cent of Camso's revenue. Brokerages View Motilal Oswal Financial Services The replacement segment is likely to continue to be the key growth driver. In original equipment manufacturers (OEMs), the outlook for 2Ws and tractors is healthy with a pick-up expected in the Truck, Bus and Radial (TBR) segment. Following the integration of Camso, its international business contribution will rise to 25 per cent from 19 per cent currently. Given the reduction in input cost, the brokerage firm has raised FY26/ FY27 EPS estimate by 4 per cent/ 8 per cent. Ceat's focus on strategic areas such as PVs/ 2Ws/ OHT/ exports (to help margins), along with prudent capex plans (to benefit FCF), should continue to improve its returns in the long run. The brokerage firm reiterates 'Buy' rating on the stock with a target price of ₹3,818 (based on ~18x FY27E EPS). Elara Capital While there is likely to be margin relief in the upcoming quarters, especially from Q2FY26, due to lower crude prices recently, the brokerage firm believes natural rubber prices will be on a structural uptrend, given the demand-supply dynamics due to the long gestation period of rubber plantations. Overall raw material cost remains flat QoQ, in line with earlier guidance. The company expects raw material cost to remain flat in Q1FY26, with reduction expected from Q2. Ceat has iterated its strategy to systematically retain current price levels despite input cost easing, which should bode well for margin. ALSO READ | YES Bank stock up 10% on SMBC deal buzz; time to buy, sell, hold? Analysts believe the tyre sector and Ceat will have reported peak margin in FY24 (13.9 per cent for Ceat). The brokerage firm expects Ebitda margin of 13.2 per cent in FY26E and FY27E. However, despite the likely recovery in Ebitda margin during FY26-27, analysts expect an Ebitda compounded annual growth rate (CAGR) of a mere 8 per cent and a PAT CAGR of 9 per cent during FY24-27E. About Ceat Ceat, the flagship company of RPG Enterprises, was established in 1958. Today, Ceat is one of India's leading tyre manufacturers and has a strong presence in global markets. Ceat produces more than 41 million high-performance tyres, catering to various segments like 2-3 Wheelers, Passenger and Utility Vehicles, Commercial Vehicles and Off-Highway Vehicles. About RPG Founded by the legendary industrialist Dr. R.P. Goenka, RPG Group is a global diversified business group with operations in the areas of Tyres, Infrastructure, Information Technology, Pharmaceuticals, Energy, Plantations, and Venture Capital. Today, RPG has several companies in core sectors of the economy: the most prominent among them being CEAT, KEC International, Zensar Technologies, RPG Life Sciences, Raychem RPG, Harrisons Malayalam and Spencer International Hotels.
Mint
02-05-2025
- Automotive
- Mint
Ceat set to regain margin muscle, but rising debt may slow the ride
A host of favourable factors is aligning to boost tyre maker Ceat Ltd's margins. While margins declined year-on-year in the March quarter (Q4FY25), they improved sequentially. Consolidated Ebitda margin stood at 11.3% in Q4, ahead of the consensus estimate of 10.7%, while gross margin came in at 37.5%. Easing input costs and price hikes in the two-wheeler and passenger vehicle segments during the quarter provided support. Ceat expects further margin tailwinds in the first half of FY26, driven by softer raw material prices. International rubber prices have fallen by $200 per tonne from the Q4FY25 range of $1,900–2,000, now trading at a ₹ 7-8/kg discount to domestic prices. Read this | Acquisition and capex keep Ceat on a roll despite short-term margin erosion Crude oil, too, has eased to $65 per barrel from $75–80 in Q4 and is expected to hover around $65-70 in the near term. Key crude derivatives such as butadiene and caprolactam were largely stable in Q4 but have declined 2-5% in April. The company plans to retain the gains from lower input costs to support margins, while taking price hikes selectively. Management has indicated comfort at a gross margin level of over 40%. Strategically, Ceat continues to pivot towards margin-accretive segments—two-wheelers, passenger cars, and off-the-road (OTR) tyres—while reducing reliance on the truck segment. 'Revenue contribution from these focus areas has surged over the years (to 63% in FY25 from a mere 20% in FY10)," said a Motilal Oswal Financial Services report dated 30 April. Ceat has also increased presence in high-margin off-the-highway (OHT)/international segments with the Camso acquisition. With Camso's integration, the company expects the international mix in its product portfolio to rise to 26% from around 19%. Camso's financials will be consolidated starting Q2FY26. Read this | Can Camso transform tyre maker Ceat into a high-margin business? Improving profitability prospects have driven earnings upgrades. Emkay Global Financial Services has upgraded Ceat's FY26/FY27 earnings per share estimates by 8%/5% on accelerating growth, and recent raw material price decline. '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 raw material (prices) sustains," said the Emkay report dated 1 May. Also read | In US-China trade war, Indian tyre makers could be collateral damage Ceat shares have gained 22% over the past year, handily outperforming the Nifty500 index. However, the management has flagged a likely increase in debt, from ₹ 1,928 crore currently to ₹ 3,000 crore, as it completes the Camso payment and operations scale. Consequently, the debt-to-Ebitda ratio is expected to rise to around 2.5x, though still below the previous peak of 2.8x.
