Tyre maker CEAT Ltd. expects recovery in its international business and replacement market, which are more profitable segments, going forward, according to company Vice Chairman Anant Goenka.
With raw material prices remaining stable, the company is expecting ‘double digit plus margins’ going forward.
“The international business or export segment has faced a little bit of headwinds because of global issues, whether it is the (Russia-Ukraine) war, whether it is currency devaluation of a lot of developing countries…,” Goenka told PTI in an interaction.
Further, he said the Indian subcontinent — Sri Lanka, Pakistan, Bangladesh — have been hit ‘because of currency and forex related issues’, and in the developing world or developed world, there has been a recessionary environment.
When asked about the outlook, he said, “We expect international market as well as the replacement market, which are the more profitable segments, to see better times going forward. The international business itself has been weak for the last four to six months and we have seen some uptick out there.”
On the replacement market, he said, it has been very strong in the commercial vehicles segment followed by passenger vehicles because of a high growth in SUVs and vehicles in Rs 10 lakh-plus categories.
However, he said sub-Rs 10 lakh segment has seen a slight slowdown relatively.
“Two-wheeler segments and smaller car segments have been more hit than the mid to high-end,” he said.
Goenka also said in the replacement segment, rural markets have been slightly harder as inflation has hit there more.
On raw material prices, he said, it has been relatively stable and the company does not expect much change at least in the next four months or so.
“Fifty per cent of our raw material is crude derivative products, 30-40 per cent is rubber. Natural rubber has gone up a little bit but largely I’d say that we expect double digit plus margins going forward.”
For the fiscal ended March 31, 2023, CEAT posted a consolidated net profit of Rs 182.39 crore as compared with Rs 70.58 crore in FY22. Its revenue from operations in FY23 stood at Rs 11,314.88 crore as against Rs 9,363.41 crore in FY22.