5 CEATLTD share price target reports by brokerages below. See what is analyst's view on CEATLTD share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
CEAT’s consolidated revenues were in-line at Rs15.7b (-10.6% YoY/ QoQ), led by volume decline as pricing was stable. Margins were better at 12.7% (PLe 7.1%), led by soft RM and cost control initiatives. While we slash FY21/22 revenues by 10.1%/8.6% (to factor in for lower OEM sales and weak replacement sales in CV segment), we upgrade margins by 100bp/80bp due to higher replacement share, lower RM and cost control benefits. This has resulted in increase in Adj. PAT by 6.7%/2.5%, as better operating performance is partially offset by lower other income and higher tax. We believe with bunch of capex (and FY21 capex guidance to Rs5.5b v/s Rs8b earlier) and higher replacement mix, CEAT is best placed to ride replacement demand recovery. Consequently, we maintain ‘Accumulate’ rating on the stock with a price target of Rs899 (earlier Rs893), based on 15x Mar-22 EPS.
With initial signs of stability in OEM volumes, low base in replacement business and new capacities, CEAT should see faster revenue growth in FY21-22. This coupled with benign natural rubber prices should aid strong EPS growth.Valuations at 14.2x/10.7x FY21/22E consol. EPS doesn’t fully capture the benefit of substantial capacity addition. Maintain Buy with TP of ~INR1,250 (~14x Dec’21 consol. EPS).
CEAT’s consolidated revenue at 17.6Bn up by 1.9% YoY/ 4.2% QoQ (in-line), led by volume growth of ~2%. Gross margins expanded 180bp QoQ/ 150bp YoY led by soft RM (~130bp QoQ) and better mix (~50bp QoQ). Volumes for the quarter increased by ~2% YoY (+3.6% QoQ) as replacements and exports grew by ~8-10% YoY, partially offset by decline in OE volumes by ~8-9%. Given the various capacity expansions (FY20E capex guided at ~Rs8-11bn) in a muted demand scenario, stable RM and management’s focus on OEMs (mix to rise by 4-5% towards OEMs for utilization of new capacity coming in PCR and TBR segment), we expect margins to remain under pressure ahead. Further high capex intensity to also result in negative FCF over FY20-22E. Consequently, we reiterate our ‘Sell’ rating on the stock with a price target of Rs910 (earlier Rs880), based on 15x Dec-21 Consol EPS.
Given the various capacity expansions (FY20E capex guided at ~Rs12.5bn) in a muted demand scenario, stable RM, reversal for employee bonus provisionand management’s focus on OEMs (mix to rise by 4-5% towards OEMs for utilization of new capacity coming in PCR segment), we expect margins to remain under pressure ahead. Further increased capex intensity to also result in negative FCF over FY20-21E. Consequently, we downgrade the stock to‘Sell’ with a price target of Rs827 (earlier Rs807) based on 15x Sep-21 Consol EPS.
Given the various capacity expansions (FY20E capex guided at ~Rs13bn) in a muted demand scenario, anticipated rise in raw material costs (particularly natural rubber, up ~17% YoY) and management’s focus on OEMs (mix to rise by 4-5% towards OEMs for utilization of new capacity coming in PCR segment), we expect margins to remain under pressure ahead. We maintain ‘Reduce’ witha lower TP of Rs757, based on 14x FY21E Consol EPS.
We expect margins to subside from current levels and hence, taper our margin expectations for FY20/21E by 40/80bps to 8.9%/8.8% respectively. We cut our valuation multiple, downgrading the stock to ‘Reduce’ with a TP of Rs886, based on 14xFY21E (earlier 15xFY21E) Consol EPS.
we expect CEAT’s operating performance to remain under pressure due to limited pricing power. Moreover, higher debt in B/S due to high capex over the next 2 years may prove to be major headwind for the stock in the medium-term. In view of lower volume, margin pressure, higher depreciation and interest expenses for higher debt, we cut our EPS estimates by 22%/6% for FY20E/FY21E. We expect down-cycle for automobile industry in FY21 and stock to underperform. Maintaining our P/E valuation multiple at 12.5x factoring lower return ratios on higher capex, we maintain our REDUCE recommendation on the stock with a revised Target Price of Rs875 (from Rs930 earlier), valuing it at 12.5x FY21E EPS.
Given CEAT’s upcoming new capacities for the TBR, PCR and 2W segments over the current fiscal (TBR capacity commissioned in Jan’19) along with anticipated rise in raw material costs (with crude prices and international rubber prices moving up, domestic rubber production to slowdown), margins too are expected to remain under pressure over FY20/21E. Hence we taper our margin expectations for FY20/21E by 50/40bps at 9.3/9.6% respectively and downgrade to ‘Hold’ with a target price of Rs1,100 based on 15x Mar’21E consolidated EPS. The stock is currently trading at 15.4x FY20E & 14.4x FY21E consol EPS.
We cut our FY19/20 earnings estimate by 8%/7% to factor in the weak demand environment, higher depreciation and finance cost. Ongoing capex cycle will peak out in FY20, with large part of interest and depreciation burden reflecting in FY21. Hence, valuations at 13.5x/11.4x FY20/21E consol. EPS are at subdued earnings. Maintain Buy with a target price of INR1,370 (14x FY21 consol. EPS).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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