CEAT's Q2 FY25 results saw EBITDA fall slightly below consensus estimates, with margins impacted by rising input costs. Revenue growth remained in line with expectations, supported by strong performances in the replacement and international segments.
17 Oct 2024 | 5886 Views | By Autocar Professional Bureau
Tyre manufacturer CEAT Ltd reported a consolidated net profit of ₹121.5 crore on consolidated revenues of ₹3,304.5 crore for the quarter ended September 30. The company’s consolidated EBITDA for the quarter stood at ₹367.9 crore, with an operating (EBITDA) margin of 11.1%, a 102 basis points decline quarterly. Its revenue ...
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Tyre manufacturer CEAT Ltd reported a consolidated net profit of ₹121.5 crore on consolidated revenues of ₹3,304.5 crore for the quarter ended September 30. The company’s consolidated EBITDA for the quarter stood at ₹367.9 crore, with an operating (EBITDA) margin of 11.1%, a 102 basis points decline quarterly. Its revenue rose by 8.2% on-year, and by 3.5% on quarter.
Despite revenue growth, CEAT faced significant margin pressure. Gross profit declined by 6% year-on-year to ₹1,240 crore on the back of increase in input commodity costs, leading to a 590 basis points decline in gross margin, which fell to 37.5%. EBITDA also declined 20% year-on-year to ₹366 crore, falling short of the consensus estimate of ₹384 crore with the EBITDA margin shrinking by 390 basis points to 11.1%.
The company’s adjusted PAT dropped by 31% on-year to ₹137 crore, slightly above Nuvama’s estimate of ₹132 crore but below the consensus forecast of ₹143 crore. The decline was mitigated by a sharp increase in other income, which surged 433% YoY to ₹19.7 crore. The company also reported capital expenditures of ₹2,100 crore during Q2 FY25.
On a standalone basis, CEAT's revenue for the quarter stood at ₹3,298.1 crore, with an EBITDA margin of 11.1%, a contraction of 93 basis points compared to the previous quarter. The standalone net profit was ₹136.5 crore.
CEAT's managing director and CEO Arnab Banerjee said CEAT has recorded the highest revenue ever in this quarter, driven largely by robust performances in replacement and international sectors. However, he said that rising commodity prices have impacted margins, but selective price increases have helped offset some of the cost pressures. Banerjee added that the revenue outlook for the upcoming quarter remains positive.
CFO Kumar Subbiah addressed the challenges posed by rising natural rubber prices, which were partially mitigated through price adjustments and cost efficiencies. Subbiah also noted that the company’s overall debt levels increased by ₹280 crore during the quarter, partly due to higher raw material inventory and the distribution of a ₹120 crore dividend in September.
Analysts suggest a range-bound to negative reaction in CEAT’s stock, given the EBITDA miss and contracting margins.