CEAT 1QFY22 call highlights (Rating: NOT RATED) - YES Securities

Staggered price hikes to help offset RM inflation - demand recovery strong

- Revenues declined 17% QoQ led by 21% volume decline while pricing was favorable by 4%. Demand back at 2HFY21 levels. Seeing higher uptick in PV and 2W while truck segment is weak.

- RM basket/KG grew 12% QoQ. Expect RM increase of 3-4% in 2Q. Have taken price hikes of ~5% since April and still need ~3-4% hikes to recover RM inflation.

- Capex at Rs1.8b in 1QFY22. Expect project capex of Rs10b and Rs1.5-1.75b maintenance capex for FY22.

- Debt increase QoQ was led by increase in WC of Rs2.36b (due to higher inventory and decline in payables) and capex.

- The cut in marketing spend due to delay in IPL is expected to normalize in coming quarters. Expect marketing spend to be ~2% sales.

- Factory inventory is higher than the normal level due to lower sales in May and June and expect it to normalize by end of Q2 while no change in dealer inventory levels.

Shares of CEAT LTD. was last trading in BSE at Rs. 1372.5 as compared to the previous close of Rs. 1366.6. The total number of shares traded during the day was 16062 in over 1910 trades.

The stock hit an intraday high of Rs. 1384.95 and intraday low of 1366.6. The net turnover during the day was Rs. 22084400.

Source : Equity Bulls

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