2010VP15 CEAT

CEAT
BSE: 500878
NSE: CEATLTD
CEAT a RPG Group companyis in manufacture of tyres, tubes, flaps for commercial vechicles, passenger car and two / three wheeler tyres
The installed capacity is around 10 Million units of tyres and its market share is around 12%. It has earned around Rs 450 from export of tyres etc in 2009-10.

1) The expansion at Nasik (50 crore) went on stream by July 31,2010
2) New facility to manufacture bus/truck radial tyres (new line of business for the company) at Halol, Gujarat in 124 acre facility (project cost 650 cr) is likely to go on stream by Ist half of October 2010
3) To add facility to manufacture 4.8 lakh bus/ truck tyre this year and expected to produce around 2 lakh units for 2010-11 which is having a EBIDTA of more than 10 percent
4) there is ample market demand backlog for radial bus /truck tyre where only 15-20% buses /truck are running on radial tyres. Latent demand expected is 62.5 lakh tyre a year with a supply of 36 lakh unit (2009-10) with the expansion for the radial tyres by other companies the installed capacity shall arise to 50 lakh units
5) turnover is expected to be around 3400 crore (36%) with EBIDTA around 192 crore and Net Profit of 72 (due to margin pressure) crore transilating into EPS of 21 per share


The value for replacement of asset at Current Market Price for 570 TPD tyre facility is around 2500 crore . out of the above the company shall be financed by loan around 1100 cr for meeting expasion need an net entreprise value Rs 1400 crore. The Book value of share is around Rs 183 (09-10)

Turnover expected at the full capacity at current product price is around Rs 3500crore with PBIDT of 192 crore which is around 5.5%

as against the same the market capitalisation is Rs 496 crore at CMP of 148.5

at .75 net entreprise value Rs 278 which discounts at PE 13.25 on the expected EPS 21 by 2011 on increased capital base (Rs 37.73 crore).

Concern are the higher rubber prices which constitute 60% of raw material cost which is ruling higher and inability of company to pass on the cost through price hikes due to severe competion (which is considered for working for EPS 21)
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Sudden spurt on shares traded on 17.08.2010
in BSE
10.86 lakh shares (3.1% of paid up capital) were traded valued at around 15.82 crore.

in NSE
16.46 lakh shares (4.79% of paid up capital) were traded valued at around 24.06 crore.