CEAT Q3 PAT jumps 27 per cent; stock soars 5 per cent

Tyre maker CEAT posted its Q3FY16 results on Friday after market hours. CEAT's PAT grew by 27 per cent on a yearly basis, however sales revenue remained tepid as it declined by 2.77 per cent.

CEAT’s consolidated revenue stands at Rs 1380.13 crore, down 2.08 per cent Y-O-Y as compared to Rs 1420.2 crore in the corresponding period of the previous fiscal. Sales growth was lower as expected due to tepid growth in auto sales, it was also affected by large scale dumping from China.

CEAT's core operating profit stands at Rs 627.36 crore, recording a growth of 26.51 per cent Y-O-Y. Softening of raw material too helped the company in maintaining its operating margins. Consumption of raw material as a percentage of total sales revenue saw a decline of 380 basis points to 55.31 per cent as against 59.11. However, other expenses increased by 235 basis points to 23.56 per cent. Operating margin for the current period expanded by 316 bps to 14.74 per cent Y-O-Y.

CEAT reported a consolidated net profit of Rs 113.39 crore for the quarter ended December, 2015, registering a growth of 27.03 per cent Y-O-Y. According to Manoj Jaiswal, CFO ‘Reduction in average borrowings levels coupled with reduction in interest rates led to interest costs reduction this quarter. Our debt /equity currently stands at a healthy 0.4’.

For nine months ended December, 2015 the company reported consolidated net profit of Rs 341.80 crore, growing by 53.08 per cent. Its consolidated revenue for the period stands at Rs. 4254.89 crore, registering a decline of 1.49 per cent as compared to the same period in the last fiscal.

Responding to a positive set of numbers, CEAT scrip was up 5.25 per cent to trade at Rs 945 on NSE. Stock has been a safe bet as it has only seen a decline of 3 per cent in the past 3- months as against benchmark indices which had fallen more than 10 per cent.