CEAT shares zoom as investors cheer tyre makers stellar Q2 show amid easing input costs
CEAT shares surged on Tuesday after the private sector tyre manufacturer staged a strong quarterly performance with more than doubling of its margin on an year-on-year basis.
CEAT shares surged on Tuesday on the back of the Mumbai-based tyre maker's strong quarterly performance, wherein its margin more than doubled compared with the corresponding period a year ago. The stock of CEAT—which manufacturers a wide range of automotive tyres, tubes and flaps—zoomed by as much as Rs 232.6, or 11.1 per cent, to Rs 2,333.9 apiece on BSE, halting a three-day losing streak and almost coming within Rs 300 of a record high registered in July.
After market hours on Monday, CEAT, part of the diversified RPG group of companies, reported a 26-times jump in consolidated net profit to Rs 208 crore for the July-September period owing to easing raw material costs and the company's improving product mix.
The company's management said demand remained stable with mid-single-digit growth in top-line across the three replacement, original equipment manufacturers and international business segments. Its revenue improved 5.5 per cent on a year-on-year basis to Rs 3,053 crore for the September quarter, according to a regulatory filing.
Its raw material expenses decreased 11.4 per cent on a year-on-year basis to Rs 1,729.8 crore for the second quarter of the current financial year.
The tyre maker reported Rs 456 crore in quarterly earnings before interest, taxes, depreciation and amortisation (EBITDA), more than two times compared with Rs 203 crore a year ago. That marked a third straight quarter of double-digit growth in EBITDA.
The company's quarterly operating profit crossed the Rs 400 mark for the first time ever, coming in at Rs 456 crore. Its margin, a key measure of a company's profitability, improved by 790 basis points to 14.9 per cent compared with the year-ago period, marking the fifth back-to-back quarter of margin expansion.
CEAT said it registered health volume growth on a sequential basis driven by strong OEM demand for its festive inventory, with stable numbers in the replacement and export segments "despite adverse seasonality".
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