CEATLTD - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.2
| Stock Code | CEATLTD | Market Cap | 15,080 Cr. | Current Price | 3,726 ₹ | High / Low | 4,438 ₹ |
| Stock P/E | 21.5 | Book Value | 1,119 ₹ | Dividend Yield | 0.81 % | ROCE | 15.8 % |
| ROE | 12.2 % | Face Value | 10.0 ₹ | DMA 50 | 3,780 ₹ | DMA 200 | 3,576 ₹ |
| Chg in FII Hold | 0.71 % | Chg in DII Hold | -0.57 % | PAT Qtr | 235 Cr. | PAT Prev Qtr | 202 Cr. |
| RSI | 48.0 | MACD | -32.8 | Volume | 54,298 | Avg Vol 1Wk | 80,850 |
| Low price | 2,322 ₹ | High price | 4,438 ₹ | PEG Ratio | 0.22 | Debt to equity | 0.69 |
| 52w Index | 66.4 % | Qtr Profit Var | 145 % | EPS | 156 ₹ | Industry PE | 28.3 |
📊 Financials: CEAT Ltd. has shown strong earnings momentum with quarterly PAT rising to 235 Cr from 202 Cr, reflecting a 145% year-on-year profit variation. ROE at 12.2% and ROCE at 15.8% indicate moderate efficiency. Debt-to-equity ratio of 0.69 is manageable, suggesting balanced leverage. EPS of 156 ₹ highlights strong earnings visibility.
💹 Valuation: Current P/E of 21.5 is below the industry average (28.3), suggesting relative undervaluation. P/B ratio ~3.33 (Price 3,726 ₹ / Book Value 1,119 ₹) is reasonable for the sector. PEG ratio of 0.22 indicates attractive valuation relative to growth. Dividend yield of 0.81% provides modest income support.
🏢 Business Model: CEAT Ltd. operates in the tyre manufacturing sector, serving automotive and industrial markets. Competitive advantage lies in brand recognition, diversified product portfolio, and strong distribution network. The company benefits from rising demand in passenger and commercial vehicles.
📈 Entry Zone: Attractive accumulation zone between 3,600–3,700 ₹, close to DMA200 (3,576 ₹). RSI at 48.0 suggests neutral momentum, while MACD (-32.8) indicates bearish undertone. Long-term investors can accumulate gradually near support levels.
🔒 Holding Guidance: Fundamentally strong with undervaluation relative to peers and robust earnings growth. Suitable for long-term holding, with monitoring of raw material costs and demand cycles in the automotive sector.
Positive
- Strong quarterly profit growth (145% YoY).
- EPS of 156 ₹ supports earnings visibility.
- PEG ratio of 0.22 highlights attractive growth-adjusted valuation.
- FII holdings increased (+0.71%), reflecting institutional confidence.
Limitation
- ROE (12.2%) and ROCE (15.8%) are moderate compared to industry leaders.
- Dividend yield of 0.81% offers limited income support.
- DII holdings decreased (-0.57%), showing mixed domestic sentiment.
- MACD (-32.8) indicates bearish technical momentum.
Company Negative News
- No major negative news reported, but margin pressures from raw material costs remain a risk.
Company Positive News
- Strong profit growth and improved FII participation.
- Expansion in automotive demand supports revenue growth.
- Stable leverage with debt-to-equity ratio of 0.69.
Industry
- Tyre industry benefits from rising automotive demand and infrastructure growth.
- Industry P/E at 28.3 suggests optimism in the sector.
- Global demand for passenger and commercial vehicles drives long-term growth.
Conclusion
✅ CEAT Ltd. is financially stable, moderately efficient, and undervalued relative to peers. Strong earnings growth and manageable leverage make it a promising long-term investment. Accumulation near 3,600–3,700 ₹ is recommended for patient investors.
I can also prepare a peer comparison with other tyre manufacturers like MRF, Apollo Tyres, and JK Tyre to show how CEAT stacks up in valuation and efficiency. Would you like me to add that?