Why Is Motilal Oswal Bullish on CEAT Despite a Cyclical Auto Environment?
About CEAT
CEAT is one of India’s leading tyre manufacturers with strong presence across passenger vehicles, two-wheelers, commercial vehicles, and off-highway segments. The company has been steadily improving its operating metrics while strengthening its strategic positioning through capacity expansion and acquisitions.
Motilal Oswal Securities has reiterated its Buy rating on CEAT and raised the target price to ₹4,579 from ₹4,515, reflecting stronger-than-expected margins and improving demand visibility across key segments.
Key Q3 Performance Highlights
🔹 Margin beat driven by improved standalone performance
🔹 Better cost control and operating leverage supported profitability
🔹 Underlying demand trends remained stable during the quarter
The brokerage highlighted that CEAT’s margin outperformance was largely structural in nature, supported by better product mix, operating efficiencies, and disciplined pricing.
Investors tracking auto and ancillary stocks alongside market trends often align positioning using Nifty Trading View.
Demand Outlook and Industry Trends
| Parameter | Brokerage View |
|---|---|
| Domestic OEM growth | High single-digit growth expected |
| GST rate cut impact | Boosted tyre demand across OEM & replacement |
| Industry pricing | Pricing discipline likely to sustain |
Motilal Oswal believes that a pickup in overall tyre demand should help the industry maintain pricing discipline, supporting margins even in a competitive environment.
|
Key Positives
🔹 Strong margin execution 🔹 Supportive demand from GST cut 🔹 Improving standalone performance |
Key Monitorables
🔻 Raw material price volatility 🔻 Competitive intensity in OEM segment 🔻 Demand sustainability post recovery |
The brokerage also remains positive on the long-term benefits of CEAT’s recent acquisition, which is expected to enhance scale, product reach, and competitiveness over the medium to long term.
Valuation and Brokerage View
Motilal Oswal believes CEAT is well placed to deliver steady earnings growth, supported by margin resilience and improving demand. The revised target price of ₹4,579 reflects confidence in execution consistency and long-term strategic benefits.
Broader auto sector sentiment can also be tracked using BankNifty Trading View.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes CEAT stands out within the tyre space due to its improving margin profile, demand tailwinds from GST cuts, and long-term strategic acquisitions. While short-term cycles may persist, the company’s structural positioning supports a positive long-term outlook. Deeper market insights are available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on CEAT
Why is Motilal Oswal bullish on CEAT?
What is the target price for CEAT stock?
How has GST cut impacted tyre demand?
Is CEAT margin improvement sustainable?
What are the long-term growth drivers for CEAT?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
