CEAT says export challenges to hurt FY23 growth

Shares of several tyre companies recently hit fresh 52-week highs as demand has returned from the auto original equipment manufacturers (OEMs), raw material prices have cooled off and sales of high-margin SUVs and CVs have improved, aiding operational performance.

However, CEAT Limited is witnessing pressure in export markets like Africa, and Europe, from where it gets 20 percent of its revenues.

“Exports grew very strongly last year, close to about 50 percent. But in the last three-four months, we are seeing some headwinds specifically in Europe and Africa and some neighbouring countries also,” CEAT Chief Financial Officer (CFO) told CNBC-TV18.

He explained that due to currency availability issues, sales to Nepal, Sri Lanka, and Bangladesh are seeing a correction, along with Europe and Africa. It is continuing in the second quarter of the fiscal as well so the firm expects some impact on total growth this fiscal if it sustains.

M&M will ramp up capacity banking on these factors that are likely to boost tractor sales

However, Subbiah said by the fourth quarter operating leverage will probably play out, and input costs shall cool off, leading to double-digit margins by the end of the 2022-2023 financial year.

“On a year–on–year basis, we would have strong growth in the current year versus last year. It is expected to be in high double-digits that would include both value growth as well as volume growth,” he added.