CEAT

The market was not too happy with the financial performance of Ceat for Q4 and FY14  and the day the results came in, the market reacted by pushing the stock into the red. The company, for Q4FY14 posted a 8% (YoY) rise in consolidated net revenue at Rs.1444 crore but ended the quarter with a 5% (YoY) and drop of 6% (QoQ) in net profit at Rs.62 crore. This was mainly on account of the 7% rise in operating costs, fall in other and other operating income, an exceptional expenditure of Rs.10 crore and tax outgo burgeoning from Rs.19 crore to Rs.31 crore (YoY). But in terms of FY14, the company has stated that it has been its best performance till date, clocking in a net profit of Rs.271 crore, up 126%. And it is due to this that it went on to declare a 100% dividend (Rs.10 face value).

The lower prices of rubber has also helped as its raw material cost, vis-à-vis a percentage to revenue was down 2% for Q4 – from 68% in Q4Fy13 to 66% in Q4FY14. Marginally lower interest costs too helped, it came down from Rs.41 crore to Rs.40 crore (YoY). And for FY14, interest costs were down 5%.Consoldiated debt for FY14 stood at Rs.1020 crore.  For FY15, the company expects to have double-digit margins and its focus will be Original Equipment Manufacturer (OEMs). And this will be led by new OEM partnerships like Royal Enfield, Volvo-Eicher and Bajaj Auto.