Ceat Q3 Review - Beat Driven By Strong Volumes, Lower Raw Material Cost: Motilal Oswal
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Motilal Oswal Report
CEAT Ltd.’s Q3 FY21 stellar performance was driven by strong volume growth and lower than estimated raw material cost inflation.
Strong demand is expected to enable pass-through of raw material cost inflation, help utilize recent capacity additions, drive free cash flow generation, and deleverage the balance sheet.
We upgrade our FY21E/FY22E earning per share by approximately 21%/14% to factor in expected increase in volume growth and price hikes.
We see catalysts in the form of strong demand and robust margin to rollback underperformance in the stock in FY21 year-to-date.
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