Ceat commences commercial production at Tamil Nadu plant; stock up 2%

Share price of Ceat , an Indian company that manufactures tyres, advanced 2.1 per cent intraday and touched a high of Rs 2904.85 per share today, September 11, 2024. Ceat share price rose after the company announced the commencement of commercial production of truck and bus radial (TBR) tyres at Kancheepuram, Tamil Nadu plant.

At around 1:28 PM, shares of Ceat were up 1.60 per cent at Rs 2,889.25 per share. By comparison, the BSE Sensex was up 64.91 points at 81,986.2.

"This is to inform you that the company's Kancheepuram, Tamil Nadu plant(s) has commenced commercial production today of Truck and Bus Radial (TBR) production line," the filing read.

 

The installed capacity of the plant is expected to progressively reach 1,500 tyres per day in the next 12 months, as per filing.

Emkay Global, on September 3, initiated coverage on Ceat with a 'Buy' rating. The brokerage gave a target price of Rs 3,650 per share.

Emkay is upbeat about Ceat on the back of best-in-class research and development (R&D), industry-leading marketing spends, and original equipment manufacturing relationship focus.

Further, as per the report, Ceat has outperformed across parameters in the last five years, with leadership in consumer categories. Ceat , it believes, is showing greater resilience to raw material volatility against peers.

"Price hikes, accelerating growth, and sustained high utilisation are seen driving margins back to FY24 levels thereafter (30 per cent EPS CAGR over FY25E-27E), with return on capital employed (RoCE) at 19 per cent," said Emkay.

Earlier, on June 7, brokerage firm Nuvama Institutional Equities maintained a 'Buy' rating on Ceat with an unchanged target price of Rs 3,000 per share. Nuvama Institutional Equities has a positive outlook on the company and reckons return on equity (RoE) to stay healthy at 16 per cent plus over FY25–26E.

"We are building in revenue/earnings compound annual growth rate (CAGR of 9 per cent/11 per cent over FY24–26) supported by growth across OEM, replacement, and export segments," the report read.

Further, considering input cost and Extended Producer Responsibility (EPR) expenses, we have assumed earnings before interest, tax, depreciation, and amortisation (Ebitda) CAGR of 6 per cent over FY24–26E. However, a reduction in debt should support earnings per share (EPS) CAGR of 11 per cent," the report read.

In the past one year, the shares of Ceat have gained 29.4 per cent against BSE Sensex's rise of 22 per cent.