Ceat Q1 Review - Operating Performance In-Line; Encouraging Recovery Since June: Motilal Oswal

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Motilal Oswal Report

Ceat Ltd.’s Q1 FY22 operating performance was in-line, but higher depreciation and interest impacted profit after tax.

Demand recovery has been encouraging since June 2021 and is back at H2 FY21 levels.

While cost inflation is moderating, the industry is taking gradual price increases to dilute the impact.

Ceat's revenue/Ebitda grew 70%/63% YoY (down 17%/down 36% QoQ)to Rs 19 billion/Rs 1.66 billion in Q1 FY22.

Volumes declined 21% QoQ and original equipment manufacturer/replacement volumes were down 30%/20%, while exports grew in the mid-single digits.

Average selling price was up 4% QoQ.

We cut our FY22E/FY23E earnings per share by ~15%/7%, factoring in raw material cost inflation, higher depreciation, and higher interest cost.

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