Ceat Q1 Review - Challenging Quarter Amid Rising Input Costs: ICICI Securities
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ICICI Securities Report
Ceat Ltd.’s Q1 FY22 performance was in-line with consensus expectations, profit after tax declined ~86% QoQ mainly due to gross margin compression (down 315 basis points QoQ).
Revenue growth continues to be led by organic growth in commercial vehicle/passenger vehicle segments coupled with new order wins across both new and existing customers (e.g. Nissan magnate, Mahindra Thar).
Outlook for H2 FY22 remains mixed due to worries on potential demand slowdown due to Covid-19 third wave and chip shortages led delays.
However, margins are likely to improve in H2 FY22 as inputs costs have started to moderate downwards (Bangkok rubber prices down more than 15% since June 2021).
On balance sheet side, Ceat's consolidated debt rose to ~Rs 17.8 billion (FY21: ~Rs 14.2 billion).
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