India Ratings and Research upgrades Ceat NCDs to 'positive' from 'stable'

Homegrown tyremaker Ceat announced that India Ratings and Research (Ind-Ra) has revised the outlook on company'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, Ceat said in a release.

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.

According to Arnab Banerjee, MD and CEO, CEAT, the positive outlook revision from India Ratings is a testament to company's 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," he added.

The Mumbai-based firm's consolidated revenue increased at a CAGR of 16% over FY21-FY24 to Rs 11,940 crore. Its 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