Ceat Q3 Results: Profit Quintuples, Approves Capex Plan Of Rs 572 Crore

Revenue for the Mumbai-based company saw a 8.6% rise at Rs 2,963.1 crore in the October-December quarter.

<div class="paragraphs"><p>A Ceat tyre. (Source: Company website)</p></div>
A Ceat tyre. (Source: Company website)

Tyremaker Ceat Ltd. reported a fivefold jump in profit in the third quarter and approved a Rs 572-crore capex plan to expand operations.

Revenue for the Mumbai-based company saw a 8.6% rise at Rs 2,963.1 crore in the October-December quarter, marginally missing analysts' estimates, according to an exchange filing on Wednesday.

Healthy volume growth across replacement and OEM segments contributed to the top line, it said.

Net profit soared 417% year-on-year to Rs 181.3 crore, beating estimates.

CEAT Q3 Results (Consolidated, YoY)

  • Revenue at Rs 2,963.1 crore vs Rs 2,727.2 crore, up 8.6% (Bloomberg estimate: Rs 2994.1 crore).

  • Ebitda at Rs 417.5 crore vs Rs 237.6 crore, up 75.7% (Bloomberg estimate: Rs 414.5 crore).

  • Margin at 14.08% vs 8.71% (Bloomberg estimate: 13.8%).

  • Net profit at Rs 181.3 crore vs Rs 34.9 crore, up 417% (Bloomberg estimate: Rs 160.4 crore).

“Replacement and international business reflected strong growth on YoY basis," said Arnab Banerjee, managing director and chief executive officer, adding that higher input costs weighed on margin.

Lower advertisement expenses and cost optimisation measures reduced the impact of gross margin contraction, according to an investor presentation.

"With stronger growth in premium segments in domestic market and recovery in international markets, we expect a stronger growth in the forthcoming quarters," Banerjee said.

Focus on generating healthy cash flows has helped Ceat to fund capex from internal accruals and also in the reduction of gross debt in the quarter by Rs 163 crore, CFO Kumar Subbiah said.

Total debt stood at Rs 1,729 crore, as per the presentation.

The board of the RPG Group company has approved capital expenditure proposals of Rs 572 crore, covering expansion plans at its existing plants.

The amount will be spent over the next three years and will be funded through a mix of debt and internal accruals, the company said.

The capex for the third quarter was Rs 215 crore.

Shares of Ceat closed 4.34% higher on Wednesday, ahead of the announcement of financial results, as compared with a 0.98% advance in the BSE Sensex.