CEAT is one of India’s leading tyre brands and the flagship company of the RPG group. CEAT produces more than 41 million high performance tyres, catering to various segments like 2-3 wheelers, passenger, utility vehicles, commercial vehicles and off-highway vehicles. Ceat exports its products to 110 countries and caters to more than 50 original equipment manufacturers (OEMs). The company reported standalone revenues of Rs. 2,711 crore in Q3FY23 against Rs 2,406 crore in the same period previous year, a rise of 13% YoY.
According to the management, December quarter is seasonally weak quarter v/s September Quarter, particularly in passenger segments across OEM and replacement. Ceat has three main market segments, replacement, OEM and exports. The company took price increase of ~0.5% during the quarter in select products in the replacement segment which aided revenue growth in December Quarter 2022.
Operating margins came in at 8.73% in Q3FY23 up 320 basis points (bps) YoY. Operating margin expansion was supported by controlled expenditure growth (up 8% YoY). Speaking on strong margin performance Mr. Kumar Subbiah, CFO at CEAT, said, “Our standalone EBITDA margins improved during the quarter largely due to lower input costs and tight control over operating expenses.”. He further added that the company brought down its overall inventories by Rs. 280 crore, which helped in bringing efficiencies in operating cash flows and minimizing borrowings. Net profit stood at Rs 42 crore in Q3FY23 against net loss of Rs 15 crore corresponding quarter previous year.
According to the management, growth in Q3FY23 was led by domestic demand. But the company remains cautious about international markets that are getting impacted by recessionary trends. The management has a positive outlook for March Quarter 2023 with respect to growth and margin performance. Speaking on capex, Subbiah said, “We intend to maintain our capex for the year at around Rs 900 crore in line with our annual plan.“ Capex for Q3FY23 was Rs 210 crore including Rs 135 crore as project capex.
