Stock meetings with good consumer ratings
Shares of CEAT rose 5 percent to Rs 3,328 in early trade on December 12, boosted by ‘buy’ ratings from Nuvama Institutional Equities and Motilal Oswal. This comes after the tire maker announced a $225 million deal to acquire Michelin’s Camso off-road construction equipment business.
Consumers are optimistic about CEAT’s growth
Nuvama has assigned a price target of Rs 3,640, suggesting an upside of around 16 percent from the last close of Rs 3,149. The brokerage highlighted the acquisition’s potential to diversify CEAT’s portfolio and strengthen its off-highway tires (OHT) and export segments.
Motilal Oswal echoed similar sentiments, saying overseas revenue would increase to 26 percent of total revenue after the acquisition. The company’s focus on making its product portfolio premium and expanding into agriculture and power sports through the Camso brand may strengthen its presence in the high-end segments.
On the other hand, Nomura maintained a neutral stance, with a price target of Rs 3,051. Although it sees a near-term decline, it expects rates to reach 20 percent in the next few years, driven by demand growth and cost adjustments.
Acquisitions are aligned with strategic objectives
The Camso deal supports CEAT’s ambitions to pay for its contributions and accelerate export growth. By improving energy use in Sri Lanka and installing new track components, the company aims to tap into the growing demand for OHT products globally.
Stock performance
CEAT shares have gained 36 percent year to date, reflecting strong investor confidence. As of 10 am on December 12, the stock was trading at Rs 3,274, up 4 percent from the previous close.
What’s next?
With expected earnings per share (EPS) gains in 1-2 years and ongoing diversification efforts, CEAT appears to be well positioned for medium-term growth, supported by strong demand and strategic plans.
