Shares of CEAT plunged nearly 5 percent in morning trade on May 3. This came as the company’s lackluster Q4 results failed to impress investors.
The tyre maker reported a 23 percent year-on-year decline in its consolidated net profit at Rs 102 crore for the quarter ended March 2024. The drop was due to higher rubber costs and new regulation on extended producer responsibility (EPR) liability.
However, CEAT’s revenue from operations rose to Rs 2,992 crore in the period under review.
Prices of rubber, a key raw material for tyre manufacturers, increased roughly 10 percent in the January-March quarter, according to analysts. CEAT’s quarterly expenses climbed 3.7 percent to Rs 2,798 crore, led by a 5.5 percent rise in raw material costs. The company’s EBITDA margin expanded to 13.1 percent in Q4.
The disappointing profits and higher input costs weighed on investor sentiment towards CEAT.
At 1:26 pm, shares of the tyre maker were trading 3.88% lower at Rs 2,520.70 on the NSE.
The company faced margin pressure due to elevated rubber prices and additional costs related to the new EPR liability norms during the March quarter.
Investors will closely monitor CEAT’s performance in the coming quarters, factoring in the raw material price trajectory and the company’s ability to pass on costs to consumers.
