How brokerages view CEAT post its analyst meet

Brokerages have mixed views on CEAT after its analyst meeting. While Nuvama has retained 'buy' and has given a target price of Rs 3,000 apiece, Philip Capital has taken a 'neutral' stance on the stock and has given a target price of Rs 2,580 apiece. 

Nuvama has a positive view on CEAT underpinned by continuing revenue growth, expanding margins, and reducing leverage. Further, the brokerage expects revenue at a nine per cent compound annual growth rate (CAGR) over FY24–26E, supported by growth across Original equipment manufacturer (OEM), replacement, and export segments. 

Moreover, it sees the net debt/ earnings before interest, tax, depreciation, and amortisation EBITDA shall reduce from 1.3x in FY24 to 1.1x in FY26E, due to an average Free Cash Flow of Rs 4 billion-plus.

However, Philip Capital remains cautious due to near-term cost pressures, "We believe that lowering product development costs on EV tyres may result in a lower competitive edge as EV tyre replacement demand picks up over the medium term." 

Analysts meet highlights:

>> The management expects double-digit growth in most segments except Truck, Bus, and Radial tyres which track Gross Domestic Product (GDP) growth.

>> The company will focus on maintaining a 33 per cent market share in the 2W segment.

>>The management is targeting more than 25 per cent export share by FY26.

>> It will focus on increasing market share by introducing 100-200 SKUs/year in the off-highway segment.

>> It will focus on electrification, premium, and digital driving.

>> It is aiming to expand into Europe and Canada.

>> 95 per cent share of super premium vehicles in the replacement market.

>> Margins may be affected due to an increase in raw material prices.

CEAT share price: Past performance

In a year, shares of CEAT have gained over 26 per cent against Nifty50's rise of over 25 per cent. 

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