(Reuters) – Indian tyre maker CEAT reported second-quarter profit below market estimates on Thursday, weighed by higher rubber costs and muted demand.
The company posted a profit of 1.22 billion rupees ($14.5 mln) for the quarter ended Sept. 30, compared to 2.08 billion rupees a year ago. Analysts were expecting a profit of 1.38 billion rupees, as per data compiled by LSEG.
Revenue from operations rose 8.2% to 33.05 billion rupees.
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KEY CONTEXT
CEAT is the first Indian tyre maker to report results for the September quarter, when Indian carmakers’ sales to dealers marked the first decline in 10 quarters.
Sales of passenger vehicles, including cars and vans, decreased 1.8% year-over-year, while production fell 0.7%, according to industry data.
Analysts noticed that demand for replacing of old or worn out tyres was subdued, while rubber prices were elevated.
Rubber prices have surged 20% in the second quarter, they said. This was reflected in CEAT’s raw material costs, which jumped 22.3%.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div
TDA Sales growth (%) growth rating* analyst price yield
(%) s target** (%)
CEAT 16.47 7.88 NULL 9.78 10.75 Buy 15 0.99 1.02
MRF 25.49 12.42 NULL 9.44 5.35 Sell 4 1.14 0.15
Apollo Tyres 16.64 8.13 NULL 8.15 13.85 Buy 23 0.97 1.16
JK Tyre & 10.37 6.58 NULL 6.70 12.85 Buy 5 0.75 1.11
Industries
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 84.0370 Indian rupees
(Reporting by Meenakshi Maidas and Yagnoseni Das in Bengaluru; Editing by Varun H K)
