Ceat Q4 Review - New Capex Likely To Curtail Free Cash Flow: ICICI Securities
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ICICI Securities Report
Ceat Ltd.’s Q4 FY21 performance was a beat on consensus expectations driven by faster than anticipated revenue growth (up ~50% YoY).
The growth momentum was driven by outperformance in passenger vehicle /commercial vehicle segments.
However, gross margins are beginning to reflect commodity price pressures (down 365 basis points QoQ).
On balance sheet side, consolidated debt fell by ~Rs 5.1 billion YoY to ~Rs 14.2 billion (FY20: ~Rs 19.3 billion) while debt/equity ratio reduced to 0.42 times (FY20: 0.66 times).
Outlook for H1 FY22 remains a concern on demand slowdown due to Covid-19 surge and original equipment manufacturer production stoppages.
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