CEAT Ltd , a leading tyre manufacturer, has expressed confidence in maintaining double-digit revenue growth for the current fiscal year, buoyed by strong demand in the rural replacement tyre segment, particularly for two-wheelers.

Q1 Financial Performance

The company recently released its unaudited financial results for the quarter ended June 30, showing a robust performance:

CEAT's total income from operations in Q1 reached ₹3,52,941.00 lakhs, marking a significant 10.54% increase from ₹3,19,282.00 lakhs in the same quarter of the previous year. This growth aligns with the company's expectations of double-digit revenue expansion.

Rural Market Driving Growth

The company's optimistic outlook is primarily attributed to the strong demand in the rural replacement tyre segment, especially for two-wheelers. This trend suggests a robust recovery and growth in rural markets, which could be a key driver for CEAT's performance in the coming quarters.

Profitability Challenges

Despite the impressive top-line growth, CEAT faced some challenges in profitability. The net profit before tax decreased to ₹15,575.00 lakhs from ₹20,287.00 lakhs in the previous year's corresponding quarter, representing a 23.23% decline. Similarly, the net profit after tax saw a 27.06% reduction, falling to ₹11,245.00 lakhs from ₹15,416.00 lakhs.

Financial Position

As of June 30, CEAT's financial position remains solid:

• Paid-up equity share capital: ₹4,045.00 lakhs
• Net worth (excluding non-controlling interest): ₹4,49,043.00 lakhs
• Outstanding debt: ₹1,81,357.00 lakhs
• Debt equity ratio: 0.40 times

The company's debt equity ratio of 0.40 indicates a relatively conservative financial structure, potentially providing flexibility for future growth initiatives.

Outlook

While CEAT faces some profitability pressures, its strong revenue growth and positive outlook for the rural two-wheeler tyre segment suggest potential for improved performance in the coming quarters. The company's focus on this market segment could be a strategic move to capitalize on the growing demand in rural areas.

Investors and industry observers will be keenly watching how CEAT balances its growth strategies with profitability improvement measures in the evolving market landscape.

CEAT Limited , a leading Indian tyre manufacturer, has announced its financial results for the first quarter, showcasing strong top-line growth amidst margin pressures.

Revenue Growth and Market Performance

CEAT reported a consolidated revenue of Rs. 3,529.40 crore for Q1, marking a robust 10.5% year-on-year increase. The company witnessed healthy volume growth, particularly in the OEM (Original Equipment Manufacturer) and replacement segments. The OEM segment demonstrated strong performance across all key categories, while realizations improved on a year-on-year basis.

Profitability and Margins

Despite the revenue growth, CEAT's profitability faced some headwinds:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin stood at 10.9%, contracting by 122 basis points year-on-year.
• Net profit declined by 27.2% year-on-year to Rs. 112.30 crore.

The company attributed the margin contraction to an increase in the raw material basket compared to the previous year and higher marketing expenses associated with IPL (Indian Premier League) during the quarter.

Operational Highlights

Mr. Arnab Banerjee, MD & CEO of CEAT Limited, commented on the results: "We continue to grow at a strong pace with double-digit growth in top-line, driven by OEM and replacement segments. Looking ahead, we are well poised to ride the premiumisation and electrification trend in domestic market, and renew our growth in international markets with stability in geopolitical situation."

Key operational highlights for the quarter include:

• High capacity utilization across all manufacturing facilities
• Capex of approximately Rs. 231 crore, fully funded through internal accruals
• Reduction in gross debt by Rs. 100 crore during the quarter

Financial Position

CEAT's financial position as of the end of the quarter:

Future Outlook

The company remains optimistic about its future prospects, focusing on:

1. Premiumisation and electrification trends in the domestic market
2. Renewed growth in international markets, contingent on geopolitical stability
3. Continued investment in capacity expansion, with plans to increase PCUV (Passenger Car and Utility Vehicle) capacity at its Chennai plant by 35% by the end of FY 2027

Sustainability Initiatives

CEAT has also made strides in its sustainability efforts:

• Commitment to science-based Net-Zero emissions reduction targets
• ~42% of plant power sourced from renewable sources
• Awarded the EcoVadis Silver Medal, placing CEAT in the 89th percentile globally for sustainability performance

As CEAT navigates through a dynamic market environment, the company's focus on revenue growth, operational efficiency, and sustainability initiatives positions it to capitalize on emerging opportunities in the automotive tyre sector.