Mehabe score: 5 G Factor: 6 Piotski Score: 7 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 6 and Piotski score of 7.
Description
CEAT, established in 1958, is one of the largest tyre manufacturers and is one of the fastest growing tyre companies in India. For the year 2020, CEAT ranked 35th amongst India’s 100 best companies to work for by the Great Place to Work Institute and was recognised as one of the best companies amongst the auto and auto component industry category.
Main Points
Diversified Revenue Profile
Presently, trucks & buses category contributes majority of revenues at 33%, followed by 2/3 wheelers (30%), Passenger cars (13%), Farm (9%), LCV (8%) & specialty category contributes the rest 7% of revenues. #Site:CEATLTDMain Symbol:CEATLTD
Stock trades at 1400.0, above its 50dma 1369.29. It also trades above its 200dma 1300.8. The stock remains bullish on techicals
The 52 week high is at 1763.15 and the 52week low is at 835.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has been maintaining a healthy dividend payout of 19.03%
Weakness
– The company has delivered a poor sales growth of 6.77% over past five years.
-Tax rate seems low
– has a low return on equity of 10.95% for last 3 years.
-Promoter holding has decreased over last 3 years: -3.94%
Competition
– The industry trades at a mean P/E of 19.9x. Balkrishna Inds trades at the industry’s max P/E of 38.54x. CEATLTD trades at a P/E of 12.2x
– Industry’s mean G-Factor is 5.3 while the mean Piotski score is 8.0. CEATLTD has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 5.9%. The max 1- month return was given by Goodyear India: a return of 25.62 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1906.0 cr compared to Rs 1120.0 cr for period ended Jun 2020, a rise of 70.2%
Operating Profits reported at Rs 166.0 cr for period ended Jun 2021 vis-vis 102.0 for period ended Jun 2020 .
Operating Margins contracted -39.8 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 5.93 compared to Rs 37.77 for previous quarter ended Mar 2021 and Rs -8.59 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 8396.0 cr for period ended TTM vis-vis sales of Rs 7610.0 cr for the period ended Mar 2021, a growth of 9.4%. The 3 year sales cagr stood at 6.3%.
Operating margins shrank to 12.0% for period ended TTM vis-vis 13.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 491.0 cr for period ended TTM vis-vis sales of Rs 432.0 cr for the period ended Mar 2021, rising 12.0%.
Company recorded a healthy Net Profit CAGR of 24.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1358.0 cr for period ended Mar 2021 vis-vis Rs 956.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 63% on a 1 Year basis vis-vis a return of 1% over the last 3 Years. – The compounded sales growth on a TTM bassis is 12% vis-vis a compounded sales growth of 7% over the last 3 Years. – The compounded profit growth on a TTM basis is 100% vis-vis a compounded profit growth of 25% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has fallen for the period ended Jun 2021. The Jun 2021 fii holding stood at 24.01% vis-vis 26.97% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 15.51% vis-vis 12.56% for Mar 2021
Conclusion
– has reduced debt.
– has been maintaining a healthy dividend payout of 19.03% – The company has delivered a poor sales growth of 6.77% over past five years.
-Tax rate seems low
– has a low return on equity of 10.95% for last 3 years.
-Promoter holding has decreased over last 3 years: -3.94%
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 1369.29 and is trading at 1400.0, thus bullish price action wise.
