New Delhi, India – 13 September, 2024: CEAT, one of India’s leading tyre manufacturer, today announced that India Ratings and Research (Ind-Ra) has revised the outlook on CEAT’s Non-Convertible Debentures (NCDs) and Term Loan to ‘Positive’ from ‘Stable’, while affirming the ‘IND AA’ rating. The rating agency has also affirmed the ‘IND A1+’ rating on the company’s commercial paper program.
The outlook revision reflects Ind-Ra’s expectation of continued increase in CEAT’s scale of operations, driven by volume growth from ongoing and completed capex. The agency also noted CEAT’s efficient working capital cycle and healthy operating cash flow.
Mr. Arnab Banerjee, MD & CEO, CEAT, commented on the rating action: “The positive outlook revision from India Ratings is a testament to our strategic focus on growth segments, operational efficiencies, and prudent financial management. We remain committed to strengthening our market position while maintaining a healthy financial profile.”
Key Highlights:
1. Outlook revised to ‘Positive’ from ‘Stable’ on NCDs and Term Loan
2. ‘IND AA’ rating affirmed for NCDs and Term Loan
3. ‘IND A1+’ rating affirmed for Commercial Paper program
4. Consolidated revenue grew at a CAGR of 16% over FY21-FY24
5. EBITDA margins improved to 13.8% in FY24
6. Net adjusted leverage reduced to 1.3x in FY24
CEAT, the first tyre brand in the world to receive the Deming Grand prize has demonstrated strong revenue growth, with consolidated revenue increasing at a CAGR of 16% over FY21-FY24 to INR 119.4 billion. The company’s EBITDA margins improved significantly to 13.8% in FY24, up from 8.6% in FY22.
The company’s focus on the two-wheeler, three-wheeler, passenger car radial tyres, and off-the-road segments, which account for about 60% of revenue, has helped cushion volatility in cash flow generation.
CEAT plans to incur capex of around INR 10 billion in FY25, primarily towards capacity expansion in truck and bus radial tyres in Chennai and off-highway tyre capacity in Ambernath.