RPG Group-owned Ceat posted a 32-fold jump in net profit for the September quarter of the fiscal, riding on the back of a dip in expenses as raw material prices softened and revenues soared with a better product mix. The company logged a net profit of Rs 207.72 crore for Q2FY24 as against Rs 6.4 crore in the corresponding quarter the year before. Sequentially, the profit has jumped 44 per cent.
Ceat’s revenue from operations grew by 5.5 per cent year-on-year (Y-o-Y) to Rs 3,053.32 crore. On a quarter-on-quarter (Q-o-Q) basis, the revenue grew by 4 per cent. Ebitda margin for the September quarter came in at 15.1 per cent, an expansion of 202 bps versus Q1FY24.
The company declared results post market hours. The company’s stock was down marginally (1.7 per cent) on the BSE to Rs 2,101 apiece. Ceat beat the Bloomberg analysts’ estimates for revenue and net profit.
Cost of raw material consumed by the company declined by 14 per cent Y-o-Y.
Speaking to Business Standard, Arnab Banerjee, managing director and chief executive officer, Ceat, said the profitability improved for several factors – better product mix, price increases taken in the aftermarket segment, and also raw material prices softening.
Banerjee, however, felt that the raw material prices have now bottomed out and from the coming quarter, they would start firming up. Meanwhile, Ceat is focusing on specialty tyres like those used in electric vehicles or specialty farm tyres and has 44 such specialty tyre launches lined up in the US, EU and India in the December quarter.
Kumar Subbiah, CFO of the firm, said, “For the fifth straight quarter, we have improved our margins Q-o-Q. Our consistent efforts in improving cost efficiencies and mix are yielding benefits. Ebitda Margin has crossed Rs 400 crore for the first time in a quarter leading to healthy improvement in our net profits. We have also managed to bring our standalone debt down by Rs 103 crore through efficient management of cash flows and improved operating performance.”
Banerjee also highlighted that they have been focusing on cost efficiencies for the last three years now, and that has also benefited the bottom line.
“The demand continues to be stable, and we are witnessing mid-single-digit growth in our top line across all three segments – replacement, OEMs, and international business. Our focus on product mix and judicious pricing helped improve margins during the quarter,” he added.