Moneycontrol Pro: Ceat in focus, here’s why

In a few ideas for profit from Moneycontrol Pro, Nitin Agarwal of Moneycontrol.Com talks about a stock that he is tracking closely, Ceat.

Ceat is an auto ancillary company, the stock price has corrected by more than 30 percent from its highs achieved in February 2021 and this has made the valuation very attractive.

One of the biggest concerns for the company is the rising raw material price. Though natural rubber prices remain stable over the past one year, crude oil prices have risen by around 60 percent in the last one year impacting the EBITDA margin for the company. In Q3 its EBITDA margin came at around 5.6 percent as compared to 14.8 percent in Q3FY21.

Ceat generates around 45 percent of its revenue from the commercial vehicle segment which has been doing exceptionally. Outlook for the tractor segment is also very promising on the back of good rabi sowing and good level of water reservoirs.