CEAT Stock Price Falls After 23% YoY Dip in Consolidated Net Profit

The stock prices of CEAT were down over 3 percent intraday on May 3, following the release of the company’s underwhelming financial results for the fourth quarter. Investors were unimpressed by the performance, as the tyre manufacturer reported a 23 percent YoY decrease in its consolidated net profit, amounting to Rs 102 crore for the quarter ending March 2024. This decline was attributed primarily to elevated rubber costs and the impact of new regulations concerning extended producer responsibility (EPR) liability.

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Despite the profit decline, CEAT’s revenue from operations demonstrated resilience, registering a notable increase to Rs 2,992 crore during the same period. The surge in the prices of rubber, a crucial raw material for tyre production, contributed to a roughly 10 percent escalation in costs for manufacturers during the January-March quarter, as highlighted by industry analysts. Consequently, CEAT experienced a 3.7 percent uptick in quarterly expenses, totaling Rs 2,798 crore, primarily fueled by a 5.5 percent rise in raw material expenditures. However, the company managed to achieve an expansion in its EBITDA margin, reaching 13.1 percent in the fourth quarter.

Arnab Banerjee, the Managing Director and CEO of CEAT, expressed optimism despite the challenging financial results, noting that the company concluded the fiscal year 2024 on a positive trajectory. Banerjee emphasized the recovery in volumes observed during the latter half of the quarter, particularly in replacement and international markets. He also highlighted the stability of margins for the quarter and underscored significant improvements in margins on a full-year basis. Banerjee further expressed confidence in maintaining the positive momentum into the first quarter of fiscal year 2025.

In addition to the financial results, CEAT’s board proposed a final dividend of Rs 30 per equity share, reflecting a 300 percent payout based on the face value of Rs 10 each, fully paid up, for the fiscal year 2024. This recommendation is subject to the approval of the company’s members at the upcoming annual general meeting (AGM).

Source: moneycontrol

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