Latest news with #CeatLtd
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.
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Business Standard
29-04-2025
- Automotive
- Business Standard
Ceat Q4 results: Net profit falls 3% to Rs 99 cr; revenue at Rs 3,421 cr
Tyre maker Ceat on Tuesday said its consolidated net profit declined by 3 per cent to Rs 99 crore for the fourth quarter ended March 31, 2025. The company had reported a net profit of Rs 102 crore in the January-March quarter of 2023-24. Its revenue from operations rose to Rs 3,421 crore in the fourth quarter compared to Rs 2,992 crore in the year-ago period, Ceat Ltd said in a regulatory filing. For the year ended March 2025, the company said its net profit declined 26 per cent to Rs 471 crore against Rs 635 crore. The revenue from operations rose to Rs 13,218 crore from Rs 11,943 crore in FY24. "Our operating margins improved in Q4 by over 120bps, largely driven by favourable revenue mix and result of strong cost controls across the value chain," Ceat CFO Kumar Subbiah said. The company incurred capex of Rs 946 crore during the year largely for capacity additions that would prepare it well to deliver growth plans in FY26, he added. "During the quarter, we incurred Rs 37 crore towards voluntary separation of employees in one of our high-cost factories as part of our continuous effort to keep our manufacturing units cost competitive," Subbiah said. The company said its board has approved a dividend of Rs 30 (300 per cent) per share for FY24-25. Shares of the company on Tuesday ended 0.48 per cent up at Rs 3,061.40 apiece on BSE.
