Target: ₹1,498

CMP: ₹1,218.8

CEAT is poised for a good growth in topline as well as bottom-line, driven by strong uptick in the automobile industry. With a market share of about 28 per cent in the two-wheeler segment (contributing about 28 per cent of volumes), the pick-up seen at the start of the current year looks promising.

Good monsoon, fading away of the pandemic and positive sentiments are all turning good for the sector. Passenger cars and utility vehicles (PCUV) is benefiting from the new launches and easing of the chip shortage. It is the best-performing segment for the company.

CEAT reported a decent top-line growth at 9 per cent q-o-q at ₹2,810 crore on volume growth of 8 per cent and above 1 per cent growth in realisations. Comparison on y-o-y basis will not give us the right picture as the base was too low due to second wave of the pandemic. The management mentioned that they have observed a pick-up in overall demand on the domestic OEM side, replacement as well as exports. Replacement demand for two-wheelers is picking up quite well (15 per cent q-o-q growth). The best growth was reported by the replacement PCUV segment (20 per cent), while the truck demand was flattish. EBITDA margins (5.9 per cent v/s 7.2 per cent) were however hurt due to high crude prices.