- CEAT’s 3QFY20 posted good operating performance as it benefitted from lower rubber prices. However, Overheads and depreciation of new Truck and Bus Radial (TBR) plant resulted in flat profit growth.

- Revenues and volume growth remained mostly flat across all segments while OEM volumes declined 8% YoY.

- Despite capex of ~INR2.7b in 3QFY20, consolidated gross debt increased just ~INR0.5b QoQ to INR18.9b, supported by reduction in working capital.

- New Passenger Car Radial (PCR) capacity will ease capacity constraints and drive faster growth in FY21. Benefits of TBR plant capacities will be seen in P&L only in 2HFY21.

- Valuations at 14.2x FY21 consolidated EPS seem low as it does not properly capture the benefit of substantial capacity addition.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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