CEATLTD - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.2
| Stock Code | CEATLTD | Market Cap | 15,768 Cr. | Current Price | 3,903 ₹ | High / Low | 4,438 ₹ |
| Stock P/E | 22.4 | Book Value | 1,119 ₹ | Dividend Yield | 0.77 % | ROCE | 15.8 % |
| ROE | 12.2 % | Face Value | 10.0 ₹ | DMA 50 | 3,788 ₹ | DMA 200 | 3,584 ₹ |
| Chg in FII Hold | 0.71 % | Chg in DII Hold | -0.57 % | PAT Qtr | 235 Cr. | PAT Prev Qtr | 202 Cr. |
| RSI | 57.4 | MACD | -1.53 | Volume | 1,15,597 | Avg Vol 1Wk | 98,281 |
| Low price | 2,322 ₹ | High price | 4,438 ₹ | PEG Ratio | 0.23 | Debt to equity | 0.69 |
| 52w Index | 74.7 % | Qtr Profit Var | 145 % | EPS | 156 ₹ | Industry PE | 30.2 |
📊 Analysis: CEATLTD trades at a P/E of 22.4, below the industry average of 30.2, suggesting relative undervaluation. Strong EPS (156 ₹) and quarterly PAT growth (145%) highlight earnings momentum. ROE (12.2%) and ROCE (15.8%) are moderate, showing decent efficiency. PEG ratio of 0.23 indicates attractive valuation relative to growth. Dividend yield of 0.77% is modest but adds stability. Debt-to-equity at 0.69 is manageable. Technicals show price above DMA 50 (3,788 ₹) and DMA 200 (3,584 ₹), with RSI at 57.4 suggesting healthy momentum. MACD (-1.53) is slightly negative, indicating short-term caution.
💰 Ideal Entry Zone: Between 3,750 ₹ – 3,850 ₹ (near DMA 50 support and valuation comfort). Current price (3,903 ₹) is close to fair entry, so staggered accumulation is suitable.
📈 Exit / Holding Strategy: For long-term investors already holding, maintain positions given strong EPS, PEG ratio, and earnings growth. Exit only if price sustains below 3,580 ₹ (DMA 200) or if profitability weakens. Holding period: 3–5 years for compounding, with periodic review of debt levels and industry demand cycles.
Positive
- EPS of 156 ₹ supports strong profitability
- PEG ratio of 0.23 indicates undervaluation relative to growth
- Quarterly PAT growth of 145% shows robust earnings momentum
- Price above DMA 50 and DMA 200 supports bullish trend
- FII holdings increased (+0.71%), reflecting foreign investor confidence
Limitation
- ROE (12.2%) and ROCE (15.8%) are moderate compared to peers
- Dividend yield of 0.77% is relatively low
- MACD (-1.53) indicates weak short-term momentum
- DII holdings reduced (-0.57%), showing domestic caution
Company Negative News
- Domestic institutional investors reduced holdings (-0.57%)
- Short-term technical indicators show mild weakness
Company Positive News
- Quarterly PAT improved (235 Cr. vs 202 Cr.)
- Strong EPS and profit growth support valuation comfort
- FII inflows indicate foreign investor confidence
Industry
- Industry P/E at 30.2 shows CEATLTD trades at a discount
- Automobile and tyre sector supported by demand recovery and infrastructure growth
Conclusion
✅ CEATLTD is a fundamentally strong candidate for long-term investment, trading at a discount to industry with attractive PEG ratio and strong earnings growth. Ideal entry is near 3,750–3,850 ₹. Long-term holders should maintain positions for 3–5 years, monitoring profitability and sector demand cycles.