CEAT Net Profit Surges 5x in Q3, Revenue Rises

New Delhi, Jan 24 (PTI) Tyre maker CEAT Ltd on Wednesday reported an over five-fold rise in consolidated net profit at Rs 181.28 crore in the third quarter ended December 2023, riding on robust sales, raw material cost reduction and operational efficiencies.

The company, which had posted a consolidated net profit of Rs 34.85 crore in the same period last fiscal, said its board has approved capital expenditure proposals of up to Rs 572 crore for various purposes, including capacity addition and rooftop solar at the existing plants. The amount is to be spent over the next three years.

Its consolidated revenue from operations in the quarter under review stood at Rs 2,963.14 crore as against Rs 2,727.2 crore in the corresponding period a year ago, CEAT Ltd said in a regulatory filing.

"Replacement and International business reflected strong growth on Y-o-Y (Year-on-Year) basis. While margins for the quarter were healthy, we witnessed a marginal drop (sequentially) primarily on account of increase in input cost," CEAT MD & CEO Arnab Banerjee said.

CEAT said Y-o-Y margin improvement was led by raw material cost reduction and operational efficiencies.

In the December quarter, raw material cost was lower at Rs 1,738.5 crore as compared to Rs 1,785.2 crore in the year-ago period.

The company said its board has cleared capital expenditure proposals to the tune of Rs 572 crore covering upstream capacity addition, cost overrun, debottlenecking, rooftop solar at the existing plants.

"The proposed amount would be spent over the next three years and is proposed to be funded through a mix of debt and internal accruals," it added.

When asked for details about the capex, Banerjee said, "it is basically a capex to order some upstream equipment for the Chennai plant which will keep us ready for the next stage of investments. These investments won't feed into any requirements of FY25 or FY26.

"We are just trying to phase it out so that in FY27-28 we don't have bunching of capex."

Further, he said the company is making some fresh investment for tapping opportunity in a high margin product expansion in agri-radial within the same set up, which will not only increase capacity but also would result in a different product mix.

"With stronger growth in premium segments in the domestic market and recovery in international markets, we expect a stronger growth in the forthcoming quarters," Banerjee said.