Ceat Gets ICICI Securities Downgrade On Rich Valuations

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ICICI Securities Report

We recently attended Ceat Ltd.’s Investor Day to understand its medium-term growth strategy. Over the next two years, Ceat aims to gain leadership position in the passenger vehicle replacement segment (currently, no. 3 player with 16% market share); it is also targeting ~200bps of market share expansion in the truck-bus radial segment.

CAMSO’s integration is underway. Nearterm focus shall be on driving growth and synergies in the off-highway tyre business.

While medium-term prospects remain strong (with respect to growth/margin), we remain watchful of US-tariff related uncertainties potentially impacting growth/margins in the near term.

Valuations remain rich, post the stock's recent run-up (~25% in last two months). We downgrade to Hold, from Add, with a target price of Rs 3,625 (unchanged) based on 16x FY27E EPS.

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