Ceat’s Robust Q2 Driven By Topline Momentum, Improved Margins; Nirmal Bang Maintains ‘Buy’

Ceat Ltd. remains our preferred structural play in the tyre sector, supported by its leadership in two-wheelers, growing presence in premium categories such as SUVs and 150cc+ motorcycles, and expanding global footprint following the CAMSO acquisition.

Favorable tax reforms, rising EV adoption, and ongoing premiumization trends are expected to drive healthy single-digit growth in India’s tyre market in the near term.

Ceat’s Position in the Electrification Trend

Ceat remains well positioned in the electrification trend, commanding ~30% OEM market share in the passenger EV segment with consistent approvals across leading models.

The company’s strong presence in the electric vehicle segment is expected to drive growth in the coming years, as the Indian government continues to promote the adoption of EVs through various incentives and policies.

Nirmal Bang’s ‘Buy’ Rating

Nirmal Bang has maintained a ‘Buy’ rating on Ceat, citing the company’s strong Q2 performance, improving margins, and favorable industry trends.

The brokerage firm expects Ceat to continue to benefit from its leadership in the two-wheeler segment, growing presence in premium categories, and expanding global footprint.

Key Takeaways from Ceat’s Q2 Results

• Strong topline growth driven by increasing demand for tyres in the two-wheeler and passenger vehicle segments
• Improved margins due to favorable raw material prices and operational efficiencies
• Expanding global footprint through the CAMSO acquisition, which is expected to drive growth in the coming years
• Strong presence in the electric vehicle segment, with ~30% OEM market share in the passenger EV segment

Indian Tyre Market Outlook

The Indian tyre market is expected to witness healthy single-digit growth in the near term, driven by favorable tax reforms, rising EV adoption, and ongoing premiumization trends.

The tyre industry is also expected to benefit from the government’s initiatives to promote the adoption of EVs, which is expected to drive growth in the coming years.

Investment Strategy

Investors looking to benefit from the growth in the Indian tyre market can consider investing in Ceat, which remains our preferred structural play in the sector.

However, investors should also consider the risks associated with the stock market, including fluctuations in raw material prices, intense competition, and regulatory changes.

Conclusion

Ceat’s robust Q2 performance, driven by strong topline growth and improved margins, makes it an attractive investment opportunity for investors looking to benefit from the growth in the Indian tyre market.

With its strong presence in the electric vehicle segment, expanding global footprint, and favorable industry trends, Ceat is well-positioned to drive growth in the coming years.