Ceat Q3 Review - Margin Pressure To Continue: Reliance Securities
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Reliance Securities Report
Ceat Ltd. delivered a highly subdued performance in Q3 FY22, with Ebitda margin coming in at 5.6% versus our estimate of 8.9% due to lower-than-expected sales and sharp commodity cost inflation.
Ebitda decreased by 59% YoY (down 39% QoQ) to Rs 1.3 billion (40% lower than our estimate), owing to higher raw material/sales. Its volume declined by 6% YoY (down 2% QoQ) due to:
lower original equipment manufacturer demand and
lower volume in the replacement market (commercial vehicle and off-the-highway segment).
Ceat’s consolidated revenue rose by 9% YoY to Rs 24.1 billion, due to price hikes, despite volume decline. The company reported a net loss of Rs 200 million and an adjusted net loss of Rs 158 million as against adjusted net profit of Rs 1.4 billion in Q3 FY21 and Rs 423 million in Q2 FY22.
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