Motilal Oswal Reiterates Buy Call on CEAT with Price Target of Rs 4,228

Motilal Oswal Reiterates Buy Rating for CEAT

CEAT's fourth quarter (4QFY26) adjusted Profit After Tax (PAT) was significantly higher than the estimates of Motilal Oswal's research team, at INR2.5 billion. This notable increase is primarily attributed to higher other income, despite the operational performance aligning with the research team's expectations. The recent reduction in Goods and Services Tax (GST) rates has contributed to a surge in tyre demand, both in replacement and Original Equipment Manufacturer (OEM) segments.

However, the recent spike in input costs is expected to exert near-term pressure on CEAT's margins. The industry will require a couple of quarters to fully pass on the impact of these increased costs. Additionally, while the Camso acquisition is expected to take time to normalize, Motilal Oswal remains optimistic about the long-term benefits this acquisition can bring to the group.

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Motilal Oswal's research team has reaffirmed its BUY rating for CEAT, with a Target Price (TP) of INR4,228. This valuation is based on an estimated price-to-earnings ratio of ~18 times the expected earnings per share (EPS) for fiscal year 2028 (FY28E). The research team's positive outlook for CEAT is driven by the long-term benefits expected from the Camso acquisition.