CEAT Limited

Consumer Cyclical — Auto Parts · NSE

₹3,287.00+₹64.90 (+2.01%)

DalalBaazaar Score

59 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

Driven by moderate debt load, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

The 60-second version of CEAT Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

CEAT Limited manufactures automotive tyres, tubes, and flaps in India and internationally.

IndustryAuto Parts

SectorConsumer Cyclical

Employees10,222

Annual revenue₹15,480 Cr

How does it make money?

Turns over ₹15,480 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 10,222 employees supports ₹1.51 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.51 Cr

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 17.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE23.0%

What is the outlook?

17 analysts covering the stock expect revenue to grow about 14.7% and earnings to grow about 59.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+14.7%

Est. earnings growth+59.7%

Analysts17

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +39% while net margin moved +170% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+39%

Margin effect+170%

DalalBaazaar Score

59/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Debt/Equity of 0.82x is manageable
✗ Current ratio of 0.67 — short-term liabilities exceed short-term assets
✗ Free cash flow is negative — growth is being funded by borrowing or fresh equity
• Interest cover of 3.8x is adequate

Quality vs. Valuation

Company Quality

62/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

75/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

25.7x

3Y Median

29.4x

40 monthly readings · mean 33.0x · range 15.9x–62.0x

Sector Median

45.7x

median of 4 sector peers

🟢Current valuation is approximately 12% below its 3y median of 29.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 44% below the peer median of 45.7x.

vs. its own history

Fair

29.4x median over 40 months · -12%

vs. sector peers

Cheap

45.7x median of 4 peers · -44%

vs. generic bands

Fair

15x–35x

EV/EBITDA

7.8x

PEG

0.46

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 8.9% to 13.6% over 3 years.
Cash generation is improving
Free cash flow is up 96% over 3 years.
Return on equity is rising
ROE has improved from 5.4% to 13.8%.
Return on capital is rising
ROCE has improved from 8.9% to 17.7%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 watch

🟡Debt is increasingFinancial
Total debt is up 43% over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.67 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 8.9% to 13.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 44% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.6% CAGR
Latest reported year was 26.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 12%✓ 13.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Interest cover stays above 3x✓ 3.8x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹639 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 1.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

6 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹13,251 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

25.7x

Fair

Fairly valued against the generic band

P/B Ratio

2.67x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹127.89

Profitable

Profitable on a per-share basis

ROE

10.8%

Moderate

Moderate capital efficiency

ROCE

17.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.82x

Moderate

Moderate leverage

Revenue Growth (YoY)

26.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-39.6%

Falling

Profits are shrinking

Dividend Yield

1.06%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹877 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

14.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

5.5%

Average

Average asset productivity

Operating Margin

5.5%

Average

Average margins

Net Margin

3.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.67

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.48

Defensive

Steadier than the market

52W Range Position

16%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3316.2 / 3428.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹11,149 Cr	₹11,782 Cr	₹13,021 Cr	₹15,480 Cr	+11.6%
EBITDA	₹994 Cr	₹1,690 Cr	₹1,513 Cr	₹2,108 Cr	+28.5%
EBITDA Margin	8.9%	14.3%	11.6%	13.6%	—
PAT (Net Profit)	₹186 Cr	₹643 Cr	₹473 Cr	₹698 Cr	+55.4%
EPS	₹46.03	₹158.87	₹116.85	₹172.78	+55.4%
ROE	5.4%	15.9%	10.8%	13.8%	—
ROCE	8.9%	19.8%	15.1%	17.7%	—
Total Debt	₹2,295 Cr	₹1,792 Cr	₹2,136 Cr	₹3,272 Cr	+12.5%
Free Cash Flow	₹326 Cr	₹852 Cr	₹149 Cr	₹639 Cr	+25.1%

🟢 Revenue has grown at 11.6% a year over 3 years.

🟢 EBITDA has grown at 28.5% a year over 3 years.

🟢 EBITDA Margin has risen from 8.9% to 13.6% over 3 years (+4.7 pts).

🟢 PAT (Net Profit) has grown at 55.4% a year over 3 years.

🟢 EPS has grown at 55.4% a year over 3 years.

🟢 ROE has risen from 5.4% to 13.8% over 3 years (+8.4 pts).

🟢 ROCE has risen from 8.9% to 17.7% over 3 years (+8.8 pts).

🔴 Total Debt has grown at 12.5% a year over 3 years.

🟢 Free Cash Flow has grown at 25.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹13,902 Cr

Total Liabilities

₹8,848 Cr

Cash & Equivalents

₹40 Cr

Operating Cash Flow

₹1,786 Cr

Capex

-₹1,147 Cr

Shareholding (proxy)

Institutional Holding

33.6%

Insider Holding

48.7%

Corporate Actions

Dividend Rate

₹35

Ex-Dividend Date

31 Jul 2026

Analyst Consensus

Recommendations

13 Buy · 3 Hold · 2 Sell

Target Price (Mean)

₹3,876.39

+17.9% vs CMP

Target Range

₹3,130 – ₹4,500

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

4 mixed2 negative

CEAT Shares Sink 9% After Q1 Profit Collapses 96%; Margin Pressure, Cost Inflation Spook Investors

HDFC Sky, 17 JulResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

CEAT Shares Fall Nearly 4% As Q2 Profit Drops Nearly 40%

NDTV Profit, 15 OctResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

CEAT shares slip 9% as Q1 FY27 net profit plunges 96% following West Asia crisis impact

Upstox, 17 JulPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

CEAT Limited (NSE: CEATLTD) Shares Fall as Q2 Profit Drops 40% and Margins Contract

Kalkine India, 15 OctResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

CEAT CFO sees margin pressure to continue in Q3; premium passenger tyres in focus

Business Today, 15 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

CEAT shares crash 9% after Q1 net profit tumbles 96% YoY to Rs 4 crore. What lies ahead?

The Economic Times, 17 JulPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth

MiddlingProfitability · Valuation · Risk

WeakFinancial Health

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you.

All 5 tripwires holding · see Key things to watch ↑