Target: ₹2,285

CMP: ₹2,077.15

Ceat hosted its Annual Investor Meet to highlight its strategic roadmap. The management emphasized its focus on increasing market share across key segments and exports markets as also improving margin and return ratios.

Some key takeaways are as follows: CEAT commands leadership in the 2W segment, with market share at 28 per cent (26 per cent in FY19). And to gain further share, it may leverage its existing 2W network to increase reach in the premium motorcycle segment. CEAT has 40 per cent Share of Business with EV 2W OEMs.

Ceat is ramping up OHT capacity from 60-70TPD currently to 105TPD/150TPD in H1FY24/end-FY24. The total installed OHT capacity will be at 300TPD, which includes the 150TPD Bhandup bias tyre capacity (converted to OHT).

Ceat has earmarked an overall capex of ₹7-750 crore for FY24 (₹500-550 crore on project capex; ₹150-200 crore maintenance capex), mainly towards OHT tyres at Ambernath and PCR in Chennai and Nagpur.

The management expects Q1 EBITDA margin to be subdued due to a 1-2 per cent QoQ RM cost increase and higher marketing spends due to IPL-related expenses.

A stable RM basket would be the key trigger. With capex intensity behind, expect cumulative FCF generation of ₹2,170 crore in FY24-26E. Due to the recent 20 per cent run-up in the stock price in the past 50 days, we recommend Accumulate from Buy and