Motilal Oswal is bullish on CEAT has recommended buy rating on the stock with a target price of Rs 1277 in its research report dated May 08, 2019.
Motilal Oswal's research report on CEAT
4QFY19 consol. revenue grew 4% YoY (+2% QoQ) to INR17.6b (in-line). While volumes declined 3%, realization grew ~6%. EBITDA margin came in at 9.2% (v/s est. of 8.5%, +100bp QoQ), driven by cut in discretionary costs, which diluted impact of price cuts (-50bp QoQ). Higher other income restricted adj. PAT decline to 28% YoY (+27% QoQ) to INR669m (v/s est. of INR528m). For FY19, revenue/EBITDA/PAT grew ~12%/5%/-0.5%.
Outlook
We like CEAT for its focus on branding and on the B2C segments of 2Ws and PCR. Also, as a large part of the growth capex will be incurred by FY20, we expect strong growth and positive generation from FY21 onwards. Maintain Buy with TP of ~INR1,277.
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