Earnings below estimate due to EPR-led provisioning

Company
06 May 2024
5 Min read 
  • CEAT's 4QFY24 results disappointed despite healthy volume growth in replacement and exports segments.
  •  Margins were hit by higher ad spending and extended producer responsibility (EPR)-related provisions.
  •  Management has provided high single-digit volume growth guidance for FY25.
  •  The company's focus on strategic areas such as PV/2W/OHT/exports, along with prudent capex plans, should continue to improve its returns in the long run.
  •  CEAT expects to manage the EPR impact through a combination of price hikes and an improved mix.
  •  The company's valuation, at 16x/13x FY25E/FY26E consol. EPS, appears attractive.
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