In This Article:
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Revenue: INR3,334.5 crores, a YoY growth of 8.2% and QoQ growth of 4.1%.
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EBITDA Margin: 11.1%, with an absolute amount of INR368 crores.
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Gross Margin: 37.5% for the quarter.
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Net Income: INR121 crores, compared to INR154 crores in Q1 and INR207 crores in the previous year same quarter.
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Volume Growth: 6.4% YoY and 1.2% QoQ.
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Debt to EBITDA Ratio: 1.19 as of September 30.
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Debt to Equity Ratio: 0.45 as of September 30.
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Capital Expenditure: INR175 crores for the quarter, INR430 crores for the full year.
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Employee Costs: Increased by 12% QoQ due to annual increments and new plant operations.
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Sri Lanka Business: 31% volume growth with 19.5% EBITDA.
Release Date: October 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Ceat Ltd (BOM:500878) achieved its highest-ever turnover of approximately INR 3,300 crores in Q2 FY25, with a significant volume achievement.
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The company inaugurated a new truck-bus radial production line in Chennai, marking a milestone in its global expansion strategy.
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International business grew by strong double digits year-on-year, with notable growth in Latin America and Europe.
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Replacement volumes grew in strong double digits, driven by healthy growth in commercial vehicle tires, passenger tires, and two-wheeler tires.
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The company is focusing on premium categories, enhancing its brand image and capturing new audiences, which is reflected in strong growth in the replacement segment.
Negative Points
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Ceat Ltd (BOM:500878) faced challenges with elevated freight rates, which impacted margins despite strong international business growth.
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Raw material prices increased significantly, with a steep 6% rise in Q2 over Q1, making it difficult to pass on the entire cost increase to customers.
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OEM segment experienced a single-digit decline, primarily due to a temporary loss of business share and slow pace of new vehicle entries.
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The company's EBITDA margin contracted by 400 basis points year-on-year, primarily due to increased raw material costs.
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Working capital increased by INR 290 crores quarter-on-quarter, largely due to higher inventory levels, impacting cash flow and increasing debt.
Q & A Highlights
Q: What is the cumulative quantum of price hikes taken so far, and how is the retention of these hikes? A: The raw material price hike has been about 4% to 5% in Q1 over Q4 and about 6% in Q2 over Q1. The cumulative price hike has been inadequate. In Q2, the overall price hike was higher in the commercial category, around 1% to 2%, and about 1.5% in passenger tires. We are looking at a steep increase in Q3, with further hikes planned for October and possibly November and December.