(Reuters) -Indian tyre maker CEAT reported a 52.6% rise in second-quarter profit on Friday on strong demand, as vehicle sales rose following the consumption tax cut and festive demand.
The company’s consolidated net profit rose to 1.86 billion rupees ($21.2 million) during the quarter ended September 30, from 1.22 billion rupees a year ago.
Revenue from operations increased 14.2%. Total expenses rose 12.2%, with the cost of materials consumed climbing 9.6%.
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KEY CONTEXT
In early September, India announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand amid economic headwinds from U.S. tariffs.
CEAT’S CEO Arnab Banerjee told Reuters last month that the company expects to see demand for tyres for tractors and entry-level motorcycles jump the most among its segments, following the tax cut.
CEAT, whose clients include Tata Motors and Maruti Suzuki India, is the first listed tyre maker to report results this quarter.
“We look forward to double-digit growth in the second half of the year,” Banerjee said in a statement.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean # of Stock to price Div yield
growth (%) growth (%) rating* analysts target** (%)
CEAT Ltd 17.69 7.78 11.75 32.82 BUY 17 0.91 0.86
MRF Ltd 26.77 13.08 8.08 19.32 HOLD 4 1.15 0.15
Apollo Tyres Ltd 16.46 7.89 6.95 25.53 BUY 23 0.96 1.03
JK Tyre & 12.73 7.42 7.90 28.81 BUY 5 0.93 0.79
Industries Ltd
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.9450 Indian rupees
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Eileen Soreng)
