Edelweiss is bullish on CEAT has recommended buy rating on the stock with a target price of Rs 1839 in its research report dated May 02, 2018.
Edelweiss' research report on CEAT
CEAT’s Q4FY18 EBITDA at INR2.0bn (up 44% YoY) came 8% below estimate due to adverse revenue mix and raw material cost pressure. Management has pegged FY19 capex at INR15-17bn (>25% FY18 sales) as the company is investing in a truck & bus radial tyre plant (production to commence in Q3) as well as a car radial tyre plant (to start in FY20). Hence, capacity is likely to jump 50% from current 1,000tonnes per day (TPD) over the next three years.
Outlook
Adverse mix and higher competitive intensity in the two-wheeler segment is likely to pressurise CEAT’s margin. Hence, we revise down FY20E EPS 4%. Maintain ‘BUY’ with revised TP of INR1,839 (earlier INR1,918).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.