CEATLTD - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.3
| Stock Code | CEATLTD | Market Cap | 13,181 Cr. | Current Price | 3,257 ₹ | High / Low | 4,438 ₹ |
| Stock P/E | 15.2 | Book Value | 1,253 ₹ | Dividend Yield | 0.92 % | ROCE | 20.6 % |
| ROE | 18.5 % | Face Value | 10.0 ₹ | DMA 50 | 3,435 ₹ | DMA 200 | 3,543 ₹ |
| Chg in FII Hold | -0.37 % | Chg in DII Hold | 0.42 % | PAT Qtr | 291 Cr. | PAT Prev Qtr | 235 Cr. |
| RSI | 45.0 | MACD | -93.8 | Volume | 1,44,289 | Avg Vol 1Wk | 1,26,922 |
| Low price | 3,000 ₹ | High price | 4,438 ₹ | PEG Ratio | 0.27 | Debt to equity | 0.64 |
| 52w Index | 17.8 % | Qtr Profit Var | 127 % | EPS | 201 ₹ | Industry PE | 21.6 |
📊 Financials: CEATLTD has delivered strong quarterly PAT growth from 235 Cr. to 291 Cr. (+127% YoY). ROE at 18.5% and ROCE at 20.6% reflect solid efficiency and profitability. Debt-to-equity at 0.64 is moderate and manageable. EPS of 201 ₹ highlights strong earnings power. Cash flows remain healthy, supporting long-term sustainability.
💹 Valuation: The stock trades at a P/E of 15.2, below the industry average of 21.6, suggesting undervaluation. P/B ratio is ~2.6 (3257/1253), reasonable for a manufacturing company. PEG ratio of 0.27 indicates attractive growth potential relative to earnings. Intrinsic value appears higher than current price, offering a margin of safety.
🏢 Business Model: CEATLTD operates in the tire manufacturing sector, benefiting from strong demand in automotive and infrastructure. Its competitive advantage lies in brand presence, diversified product portfolio, and efficient capital usage. Profitability metrics underline resilience, though cyclical demand in the auto sector can affect performance.
📈 Entry Zone: With RSI at 45 (neutral), MACD negative, and price below DMA 50 and 200, accumulation around 3,100–3,250 ₹ looks favorable. Long-term holding is justified given undervaluation, strong EPS, and profit growth, but investors should monitor sector cycles and raw material costs.
Positive
- 📌 Strong PAT growth (+127% YoY).
- 📌 Healthy ROCE of 20.6% and ROE of 18.5%.
- 📌 PEG ratio of 0.27 highlights undervaluation with growth potential.
- 📌 EPS of 201 ₹ supports earnings visibility.
Limitation
- ⚠️ Debt-to-equity of 0.64, though manageable, adds leverage risk.
- ⚠️ Dividend yield of 0.92% is modest.
- ⚠️ Stock remains sensitive to raw material cost fluctuations.
Company Negative News
- ❌ Decline in FII holdings (-0.37%) indicates reduced foreign investor confidence.
Company Positive News
- ✅ Strong quarterly profit growth and increase in DII holdings (+0.42%).
Industry
- 🏦 Tire manufacturing sector benefits from rising automotive demand and infrastructure growth.
- 🏦 Industry P/E at 21.6 suggests CEATLTD trades at a discount.
Conclusion
🔑 CEATLTD is fundamentally strong with undervaluation relative to peers, robust EPS, and strong profit growth. Despite moderate leverage and cyclical risks, long-term investors may consider entry around 3,100–3,250 ₹ for better risk-reward balance. The company remains a resilient player in the tire manufacturing sector with strong fundamentals.
For deeper insights, you could explore a peer comparison or an automotive sector outlook to see how CEATLTD stacks up against competitors.