Ceat - Aiming To Expand Global Presence In Off-Highway Tire Segment: PL Capital

PL Capital Report

Ceat Ltd. entered into a definitive agreement to acquire the off-highway tyre business of Camso for $225 million (~Rs 18.7 billion). Camso’s OHT business has a major presence in North America and Europe from where it generates ~90% of its revenue.

The new business will add ~12% (FY27E) incremental revenue, however, the cost associated with the licensing fees and rise in interest expenses shall offset meaningful expansion in its overall profitability leading to a modest EPS expansion of ~3% in FY26E/FY27E over our previous estimates.

Additionally, the domestic business continues to witness pressure from the OEMs market which have reported lower than anticipated volume expansion in commercial vehicles and passenger vehicles leading to subdued volume expansion. Considering these factors, we retain our “Hold” rating on the stock with a target price of Rs 3,171 (previous Rs 3,063), valuing it at a P/Ex of 15 times on its Sept’26 earnings.

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