RPG Group’s flagship company on Thursday reported a 41.5% year-on-year drop in consolidated profit after tax (PAT) to Rs 121.5 crore for the three months ended September 2024. In comparison, the Company had posted a PAT of ₹207.7 crore in the previous year.
Sequentially, the company’s net profit declined 21.2% from Rs 154.2 crore in the previous quarter, the tire company said.
In the September quarter, Ceat reported revenue from operations of Rs 3,304.5 crore, up 8.2% from Rs 3,053.3 crore a year earlier. Sequentially, revenue from operations increased 3.5% from ₹3,192.8 crore in the previous quarter.
The company’s consolidated EBITDA stood at Rs 367.9 crore, down 20.3% from Rs 461.8 crore last year. EBITDA margin also contracted to 11.1% compared to 15.1% in the corresponding period of the previous fiscal year.
Despite posting the highest revenue in its history, the company’s shares fell on concerns about shrinking margins and rising debt levels, market experts said.
The market reacted negatively to the company’s poor net profit in the second quarter, the contraction of margins and the increase in debt in the second quarter, and the share price fell as much as 5.72% to an intraday low of 2,724.1 rupees each on the BSE. However, the stock recovered some of the initial losses to trade at ₹2,904.1 apiece, up 0.51%, at 11:12 am.
“This quarter marks our highest revenue to date, driven largely by strong performance in our Replacement and International sectors. While there is a significant increase in raw material prices, our margins were impacted during the quarter. We took selective price increases that offset some of the impact on costs. Revenue outlook remains positive as we enter the third quarter,” said Arnab Banerjee, MD & CEO, Ceat Ltd.
Standalone, the tire company reported revenue from operations of ₹3,298.1 crore in Q2FY25, up 8.4% year-on-year. Standalone PAT for Q2FY25 stood at ₹136.5 crore, reflecting a 31.5% year-on-year decline from ₹199.1 crore.
Kumar Subbiah, CFO of CEAT Ltd, highlighted the impact of rising raw material costs, particularly natural rubber, on the company’s performance.
However, the company’s overall debt level increased by Rs 280 crore, driven by higher raw material inventory and the distribution of a dividend of Rs 120 crore in September.
As Ceat prepares to enter the third quarter, it remains optimistic about its revenue growth, despite the current challenges posed by rising raw material costs and the fluctuating global economy.
CEAT shares were trading 0.47% higher at 2,905.3 each at 11.40am on Friday 18 October. The stock has gained 19.7% this year, so far.
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