Ceat Eyes Q4 Margin Boost On Stable Input Cost, Says CFO Kumar Subbiah
The consolidated Ebitda margins of Ceat contracted to 10.5% in Q3 FY25, as compared to 14.4% a year ago and 11.1% sequentially.
Ceat Ltd. aims to drive margin growth, bolstered by the expected stabilisation of raw material prices in the fourth quarter of the current fiscal year, according to the company’s Chief Financial Officer Kumar Subbiah.
The consolidated Ebitda margins of Ceat Ltd. contracted to 10.5% in Q3 FY25, as compared to 11.1% in the preceding quarter and 14.4% in the year-ago period.
Talking to NDTV Profit, Subbiah said that raw material prices moved up in the October-December quarter and despite taking price hikes across categories, the gross margins of Ceat were impacted.
“Raw material cost moved up in Q3 in line with what we had anticipated. We managed to take some price increases, particularly in some categories like passenger cars, radial tyres, truck and bus radial, and light commercial vehicle during the quarter at different points in time,” he said.
“To the extent of the gap between, the price increase and raw material increase, does have some impact on our gross margins,” Subbiah added.
The top executive emphasised that raw material prices going up was the primary reason for the drop in Q3 margins.
“We expect raw material prices to be more or less stable in Q4 in line with Q3, possibly maybe a percentage change,” he said.
“As we expect raw material prices to be stable, any price increase we take should translate to, a positive impact on margins,” Subbiah added.
The Ceat CFO explained that in the first nine months of FY25, the price increase did not have any effect since the raw material prices kept going up.
“In the past 9 to 12 months, the price increases that we took did not lead to any margin expansion because the raw material continued to increase during this period,” he said.
Commenting on the slowdown in sales among original equipment manufacturers (OEMs), Subbiah stated that it is unlikely to affect Ceat, as the company has already secured new orders from the segment.
He additionally revealed to NDTV Profit that Ceat will clock a double-digit growth in the segment.
“We expect Q4 OEM growth to be in double digits for us, considering some new orders that we have got from OEMs. So, the weakness in OEM sales that we are seeing, in terms of the end product, is not going to affect us in Q4 mainly because we have got some new orders and therefore, we are expected to grow in Q4,” the top executive said.
Shares of Ceat Ltd. were trading at Rs 3,012.70 apiece, down by 1.03%, on the NSE on Thursday in contrast to the benchmark Nifty 50 which closed 0.42% higher at 23,311.80 points.
