CEATLTD - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.1

📊 Fundamental Analysis

CEAT Ltd shows a solid mix of valuation, profitability, and growth potential. Here's how the key metrics stack up

Metric Value Implication

Market Cap ₹13,577 Cr Mid-cap; decent scale and liquidity

Stock P/E 29.6 Reasonable compared to industry PE of 33.9

PEG Ratio 0.37 Excellent; indicates undervaluation relative to growth

ROCE / ROE 15.0% / 11.7% Healthy returns; efficient capital usage

Dividend Yield 0.89% Moderate; adds value for long-term holders

Debt-to-Equity 0.49 Manageable; not overly leveraged

EPS ₹107 Strong earnings base

Qtr Profit Var -22.8% Some earnings pressure; worth monitoring

FII/DII Holding Change +2.11% / -1.45% FII interest rising; DII trimming exposure

📉 Technical Analysis

Current Price: ₹3,353

DMA 50 / DMA 200: ₹3,588 / ₹3,222 → Trading below 50 DMA but above 200 DMA; neutral to mildly bearish

RSI: 34.7 → Near oversold zone; potential for rebound

MACD: -80.9 → Bearish momentum

Volume: Significantly below average → Weak short-term conviction

🧠 Valuation & Entry Zone

Given the low PEG ratio and solid fundamentals, CEAT is a good candidate for long-term investment. Ideal entry zone

₹3,200–₹3,300

This aligns with the 200 DMA and offers a margin of safety

If it dips further toward ₹3,000, that would be an even stronger accumulation zone.

📈 Long-Term Investment Outlook

Pros

Undervalued growth (PEG 0.37)

Strong EPS and decent ROE/ROCE

FII interest increasing

Reasonable debt levels

Cons

Recent profit decline (Qtr -22.8%)

Weak short-term technicals

Low dividend yield for income investors

Overall, CEAT offers a compelling long-term story, especially if earnings stabilize and margins improve.

🏁 Exit Strategy / Holding Period

If you already hold this stock

Short-Term: Avoid panic selling; RSI suggests near-term bottoming

Medium-Term: Hold through volatility; reassess if price breaks below ₹3,000

Long-Term: Target ₹4,200–₹4,500 over 12–24 months if growth sustains

Hold as long as PEG stays below 1 and ROE remains above 11%. Consider partial profit booking near all-time highs if valuations stretch.

Would you like a peer comparison with other tyre manufacturers like MRF or Apollo Tyres?

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