A report by ICRA published in May predicted slower domestic tyre sales growth for FY25, contrasting CEAT's optimistic outlook.
18 Oct 2024 | 3084 Views | By Shahkar Abidi
CEAT Ltd., a leading player in the automotive tyre industry, outlined an optimistic outlook for the second half of FY25, forecasting double-digit growth in both the replacement and export segments, alongside modest improvements in the original equipment manufacturer (OEM) market. This guidance was provided by the company’s leadership during the ...
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CEAT Ltd., a leading player in the automotive tyre industry, outlined an optimistic outlook for the second half of FY25, forecasting double-digit growth in both the replacement and export segments, alongside modest improvements in the original equipment manufacturer (OEM) market. This guidance was provided by the company’s leadership during the post-results conference call following the Q2 FY25 financial performance announcement.
The company's projections come after a May report by credit ratings agency ICRA, which signalled a potential moderation in domestic tyre sales growth for FY25. Tyre sales volumes are expected to grow at a modest rate of 4-6% in FY25, down from an estimated 6-8% in FY24, with the commercial vehicle segment facing subdued demand due to a high base effect and weaker economic conditions, according to the report.
In line with its growth strategy, CEAT announced plans to launch over 40 new SKUs per quarter in the agricultural segment, along with 30-40 SKUs in the PCR segment and 8-10 SKUs in the truck and bus radial (TBR) segment over the next 2-3 quarters.
CEAT posted a consolidated net profit of Rs 121.5 crore, aided by a consolidated revenue of Rs 3,304.5 crore for Q2 FY25, marking an 8.2% year-on-year growth and a 3.5% increase quarter-on-quarter. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Rs 367.9 crore, reflecting an EBITDA margin of 11.1%. The EBITDA margin saw a slight quarterly decline of 102 basis points.
During the second quarter of the ongoing financial year, CEAT reported a mixed performance across segments. The truck and bus (T&B) replacement segment saw mid-single-digit sales volume growth year-on-year, while sales in the OEM segment declined. In the passenger car radial (PCR) category, OEM sales were flat, and replacement sales volumes grew by low single digits.
The two-wheeler segment exhibited stronger results, with OEM sales expanding in double digits and replacement sales volumes increasing by high single digits. Specialty tyres and light commercial vehicles (LCVs) faced a contraction in sales volumes. Overall, OEM sales declined 3-4% year-on-year, while replacement sales registered a robust double-digit increase.
Exports also delivered strong results, growing by double digits in Q2 FY25 and contributing 19% to overall revenue. CEAT expects this figure to rise to 20-21% in the coming quarters, driven by a resurgence in demand for specialty tyres and expanded market penetration in Europe, the US, and Latin America, bolstered by the launch of new product lines.