>CEAT (ANGEL BROKING)

PERFORMANCE HIGHLIGHTS

■ Marginal 3.2% increase in Top-Line: Ceat clocked a turnover of Rs674cr (Rs653.3cr) during 1QFY2010, indicating a small increase of 3.2% yoy. The Top-line growth was mainly on account of a 15% increase in its Replacement Segment Sales. However, the OE Sales declined by 48% to Rs59cr.

■ OPM at 15.4%: Ceat clocked an Operating Profit of Rs103.8cr (Loss of Rs0.1cr), which was well above our estimates. The surge in the Operating Profit was primarily on account of a substantial 18.4% reduction in the Raw Material Cost to Rs391.3cr (Rs479.3cr). The company’s OPM for the quarter stood at a highly impressive 15.4%. Going ahead, we expect the company to clock healthy operating margins, although we do not believe that it would be
able to maintain the high levels recorded in this quarter.

■ Net Profit at Rs60.2cr: Ceat clocked a Net Profit of Rs60.2cr during the quarter (Loss of Rs10.7cr). The company had clocked a net loss of Rs16.1cr in FY2009, which turned out to be one of the worst years for the tyre industry as a whole.

■ Key Development: On January 25, 2009, Ceat commenced construction work at its new radial tyre plant at Halol, near Baroda in Gujarat, entailing an investment of Rs500cr. The plant would manufacture radial tyres for trucks, buses and passenger cars, and a substantial portion of the production would be exported. The progress of the project is satisfactory and the company expects to start commercial production by October 2010.

To see full report: CEAT