About the Company:

CEAT was founded in 1924 by Virginio Bruni Tedeschi as Cavi Elettrici e Affini Torino, initially producing electrical and telephone cables. During World War II, it diversified into rubber and began manufacturing tires in 1945. CEAT Tyres of India was established in 1958 in collaboration with the Tatas, setting up its first factory in Mumbai and laterin 1981, the RPG Group acquired CEAT.

It produces best-in-class, high performance tyres for a wide range of vehicles, including tyres for 2/3 Wheelers, Passenger and UtilityVehicles, Commercial Vehicles and Off-Highway Vehicles and produces over 45.07 Million Tyres in a year. The Company's business is manufacturing of automotive tyres, tubes and flaps.

CEAT has 6 manufacturing plants and 17 outsourcing units and plants are located in Nashik, Mumbai, Halol, Ambernath,Chennai and Nagpur. Ambernath plant is undertaken by CEAT's wholly owned subsidiary. CEAT is aggressively working on expanding its manufacturing capacities across product; categories for 2-Wheeler tyres in Nagpur, Commercial Vehicles Radial tyre plant in Halol and Off-Highway tyres in Ambernath while also setting up a greenfield facility for Passenger Car tyres in Chennai.

Through CEAT Specialty Tyres Limited, its wholly owned subsidiary, CEAT has an off-highway tyre manufacturing plant at Ambernath, Maharashtra, which commenced commercial production in FY 2017-18. CEAT has invested heavily in the development of a state-of-the-art R&D centre at Halol to enable a funnel of innovative new products.CEAT has research facilities in Halol (India) and Frankfurt (Germany). The company emphasizes sustainability and innovation in tires, focusing on extended mobility, fuel efficiency, and environmentally friendly materials​.

CEAT's replacement network covers 5,500 dealers, 950 special channels, with over 530 retail format stores covering over 900 districts across the country.The company has established relationships with 50+ major OEMs like Tata Motors, Ashok Leyland, Escorts, Mahindra, Maruti, Hyundai, Kia, Volkswagen, Honda, Royal Enfield, Bajaj, Piaggio, etc.

Company has 7 subsidiaries out of which 4 are in India, and 1 in the USA, Sri Lanka and the Netherlands. The company has a JV in Bangladesh with a 70:30 ratio. It also has an Associated company namely Tyresnmore Online Private Limited.Company exports to 110+ countries are categorized into 7 clusters for ease of operations. It is the market leader in the country of Srilanka with 50%+ market share where it runs operations through a JV of 50:50. The company is developing a product range to cater to US markets and shall enter the US for passenger and Commercial segment in FY24.CEAT is also establishing a subsidiary in Indonesia to enhance its global presence. The expansion aims to cater to the growing demand in Southeast Asia. While CEAT will hold a major stake, a minor share will comply with local regulations.It has also its representative offices at Indonesia, Germany and the United Arab Emirates to serve customers in foreign markets.

The company has also agreed to acquire the CAMSO brand’s off-highway construction equipment bias tyre and tracks business from Michelin for approximately US$225 million, with cash outflows starting from Q1FY26. The acquisition will be funded through a 30:70 mix of internal accruals and debt, including progressive payments to Michelin.Company also aims to halve its carbon footprint by 2030, with renewable energy comprising over 50.9% of its total energy consumption and a target to use 40% sustainable materials.

To continue building the brand 'CEAT', the company is associated with sports like Women's T20 & football clubs, IPL, WIPL, etc. CEAT has sustained association with Rohit Sharma, Shubhman Gill, Shreyas Iyer, and Harmanpreet Kaur as the brand ambassadors for CEAT along with actor Karthik Sivakumar.

Fundamentals:

Financial Results:

Company reported revenue at Revenue Rs. 3,420.6 Cr with 3.7% on QoQ basis and 14.3% growth on YoY basis. Its EBITDA margin reached 11.5%, with 101 bps grwoth in QoQ while -189 bps on YoY basis. Its Quarterly Net Profit was Rs 100 Cr which is de-growth of -15.7% YoY.

In Q4Fy25 company reported Healthy YoY volume growth in OEM segment followed by replacement segment. Its International business impacted both on QoQ and YoY basis due to global macroeconomics conditions. On QoQ basis, volumes in OEM segment grew significantly, while replacement and export segment remained flattish while Realizations improved both on QoQ and YoY basis.

Key Highlights:

1. CEAT recently launched three advanced tyre innovations for its SportDrive range, further strengthening its presence in the ultra-high performance and luxury fourwheeler segment. With these launches, CEAT becomes the first Indian tyre manufacturer to produce Run-Flat tyres and 21-inch ZR-rated tyres capable of handling speeds greater than 300 KMPH with CALM Technology, marking a significant milestone in India's automotive manufacturing capabilities.
2. Recently company also attained a significant milestone with its Chennai plant being recognised as part of the World Economic Forum’s (WEF) Global Lighthouse Network. CEAT is the first tyre brand in the world to have received this prestigious honour. The Chennai plant’s inclusion in the Global Lighthouse Network builds on the success of CEAT’s Halol facility, which was the first tyre facility in the world to be inducted. This recognition, marking CEAT’s second facility to achieve such distinction, underscores the company’s commitment in institutionalising cutting-edge Fourth Industrial Revolution (4IR) technologies at scale to achieve unparalleled advancements.
3. Company also recently inaugrated  it’s best in class Truck Bus Radial (TBR) production line at their Chennai manufacturing plant. The new line will progressively reach a production capacity of 1500 tyres daily over the next 12 months and marks a significant milestone in CEAT’s drive to expand its footprint in international markets. The new TBR line complements CEAT’s existing production capabilities, including the manufacture of premium Passenger Car Radial (PCR) tyres and Motorcycle Radial (MCR/MCS) tyres . This expansion ensures that CEAT is wellpositioned to meet the growing demands of high performance vehicles both in the domestic and international markets, all while maintaining its leadership in safety, sustainability, and digital innovation.
4. CEAT, entered into a partnership with Bayer 04 Leverkusen, theBundesliga champions and DFB Cup winners. This two-year partnership designates CEAT as thepremium tyre partner for the next two seasons, effective immediately, and will run until 30June2026.
5. It has also taken the performance of its two-wheeler tyre range to a higher level with a new range of steel radial tyres, SPORTRAD and CROSSRAD. This premium range of steel radial tyres is specially crafted to unleash the full potential of high performance motorcycles. The SPORTRAD series is designed for high speed and cornering; while the CROSSRAD is a multi terrain high grip tyre.

Conclusion:

In conclusion, CEAT Tyres emerges as a well-established player in India's highly competitive tyre industry, showcasing strong fundamentals backed by a robust financial performance and consistent market positioning. With a solid track record of innovation, strategic expansion, and an ability to navigate the challenges of fluctuating raw material costs, CEAT is well-equipped to maintain its growth trajectory.

While the company faces external headwinds, such as global supply chain disruptions and increasing raw material prices, its focus on cost optimization, expansion into high-growth segments, and commitment to sustainability position it for long-term success. The company’s efforts in increasing its penetration in the premium segment and expanding its footprint in both domestic and international markets are noteworthy.

From an investment perspective, CEAT Tyres appears to be a compelling opportunity, especially for those with a medium to long-term horizon. Its stable financial health, attractive valuation, and growth potential make it a solid pick for investors seeking exposure to the Indian automotive sector. However, investors should keep an eye on global commodity price fluctuations and the evolving competitive landscape, as these factors could influence the company's performance in the near term.

HET ZAVERI
info@smartinvestment.in

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