CEAT reports five-fold jump in Q4 profit on lower raw material costs

Indian tire maker CEAT Ltd reported a more than fivefold increase in its fourth-quarter profit on Thursday, buoyed by lower raw material costs and strong domestic demand.

CEAT’s consolidated net profit rose to ₹134 crore ($16.40 million) in the three months ended March 31, from ₹25.25 crore a year earlier.

Analysts on average expected a profit of 90.83 basic rupees, according to Refinitiv IBES.

Indian auto and bicycle manufacturers have reported strong domestic growth, which in turn has fueled demand for tire manufacturers. They also raised prices, which analysts said would boost margins.

Mumbai-based CEAT’s revenue increased by around 11% to Rs.2,875 crore. Its overall expenses increased by 5% but the cost of consumables decreased by 6.1%.

That, plus higher prices, helped CEAT’s earnings before interest, tax, depreciation, and amortization (EBITDA) margin increase to 13.1% from 7.2% last year.

“In terms of exports, we continue to face pressures as a result of headwinds from the global economy, largely driven by the ongoing war and currency depreciation,” Vice Chairman Anant Goenka said in a statement.

However, while commercial and passenger vehicle wholesale sales growth slowed in April, analysts expect demand for alternative tires will provide a cushion for tire manufacturers including CEAT rivals MRF Ltd, Apollo Tires Ltd and JK Tire & Industries Ltd in the coming quarters.

“We’re starting to see some recovery in exports and the replacement market, especially in the commercial category. We’re hopeful that the coming quarters will see more growth pick-up,” CEAT said.

Earlier this week, MRF Ltd. said its fourth-quarter profit more than doubled.

(This story has not been edited by Business Standard staff and is automatically generated from a shared feed.)