This flagship company of the RP Goenka group posted a 125% (YoY) jump in consoldiated net profit at Rs.65 crore but QoQ, it has been a flat performance, with net profit showing less than 1% rise. Net revenue rose 8% (YoY) but down 1.2% (QoQ) at Rs.1317 crore. The YoY performance has soared mainly on the back of strong numbers coming in from Sri Lanka. What also helped was benefit of higher realization due to higher capacity utlisation at its Halol plant. The company has stated that this impressive YoY 125% rise in bottomline was on account of increased OEM business, the strategic shift to high margin product mix, better realizations from replacement markets and the strong numbers from Sri Lanka. In fact its Sri Lankan subsidiary showed a 16% rise in revenue and net profit doubled. 20% of Ceat’s revenue comes from exports to SE Asia, Africa and Latin America. The market was more enthused with a 320 bps (YoY) jump in its EBITDA margin at 12.3%. Raw material cost, mainly rubber, QoQ rose 3.6% as heavy rains disrupted rubber production in Kerala, leading to domestic rubber prices rising from Rs.160/kg to Rs.195/kg. But Ceat bought imported rubber which was available much cheaper than domestic at Rs.150/kg. 50% of its rubber was thus sourced from imports vis-à-vis the usual 25%.

The company has also reduced its debt by Rs.400 crore and by another Rs.100 crore in the coming months. Its current debt now stands at Rs.900 crore. The company has a capex of Rs.70-80 crore for current fiscal. It is planning to set up an office in Indonesia and also in Africa as it feels having an office in these regions will directly boost its exports by 7-8%. It hopes to increase the share of its exports from the present 20% to 23-24% soon.  The company hopes to maintain EBITDA margins at 10-12% in the coming months.