CEAT profitability increased in Q2FY16: Hopes to boost topline as phase II of Halol plant commissioned

CEAT declared its Q2FY16 result yesterday. The company's revenue declined by 1.97 per cent to Rs 1409 crore in Q2FY16 as compared to same period in previous fiscal year. Its total expenditure decreased by 4.36 per cent to Rs 1207 crore in Q2FY16 on yearly basis. CEAT's total expenditure reduced predominantly due to a 5.27 per cent reduction in raw material prices during the quarter.

CEAT's EBITDA increased by 15.24 per cent to Rs 202.18 crore in Q2FY16 as compared to the same period in the previous financial year. The company's EBITDA margin expanded by 214 basis points to 14.34 per cent during Q2FY16 on a yearly basis. Its net profit also rose by 30.42 per cent to Rs 107.4 crore in Q2FY16 as compared to same period in previous fiscal year. CEAT's net profit margin expanded by 189 basis points to 7.62 per cent in Q2FY16 on yearly basis.

In the Q2FY16, CEAT commissioned phase II of its Halol plant. This initiative has currently ensured an increase of close to 1 lakh tyres per month in CEAT's production capacity in passenger car and utility vehicle radial segment.  The company has a complete ramp up of capacity at Halol Phase-II which will happen over a period of next 18 months to achieve a terminal capacity of little over 4.5 lakh tyres per month. This will take up the total capacity a little over 7.5 lakh tyres per month.

CEAT's OEM segment started catering to the recently launched Mahindra TUV 300 and Renult KWID models respectively. The dips in crude and rubber prices were welcome, though Chinese products flooding the market impacted the industry last quarter and the company's top line to a certain extent. However, the margins improved largely due to lower raw material cost coupled with improving product mix.

CEAT's shareholding pattern indicates that FII holdings contracted by 194 basis points to 19.34 per cent and DII holdings also contracted by 85 basis points to 7.3 per cent in September 2015 quarter. The share price of the company increased by 1.79 per cent on bourses in early trades and is trading at Rs 1178 on intraday basis.

CEAT  flagship company of RPG Enterprises, has presence in the manufacturing of Automotive Tyres, Tubes & Flaps. The Company also manufactures radial tires for a range of vehicles. Its tire range includes motorcycles, scooters, cars and sports utility vehicles (SUV), farm vehicles and trailers, last mile vehicles, light commercial vehicles (LCV), trucks and off-the-road (OTR) vehicles. CEAT exports its products to various markets across the world. The Company's manufacturing plants are located in Nashik & Bhandup (Mumbai) in Maharashtra and Halol in Gujarat.