Nomura expects 11 percent truck and bus radial (TBR) tyres growth and 5-6 percent growth in passenger/2-wheelers tyres in FY20
Ceat shares fell 2.5 percent intraday on July 2 after Japanese brokerage house Nomura maintained 'reduce' call on the stock and cut target price by 16.6 percent on slower growth.
"We cut price target to Rs 817 from Rs 980 per share earlier," the brokerage said, adding the expansion in competitive and capital intensive segments will impact return on capital employed and weak original equipment demand will impact the industry in the near term.
Nomura expects 11 percent truck and bus radial (TBR) tyres growth and 5-6 percent growth in passenger/2-wheelers tyres in FY20.
"We do not see impact from additional duties of 9-17 percent on TBR imports from China," said the brokerage that expects Ceat to deliver 9/10 percent volume growth in FY20/21.
"We see rising margin headwinds from the adverse product mix and hence cut margin estimates by 30/60 bps to 9.1 /9.2 percent for FY20/21," Nomura said.
The stock plunged 28 percent in last one year. It was quoting at Rs 905.50, down Rs 21.40, or 2.31 percent on the BSE at 1056 hours IST.
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