Ceat के कारोबार और क्रूर की कीमतों में कमी से कितना फायदा पर MD & CEO Arnab Banerjee का Outlook

Summary

The video discusses CEAT's current position in the tire industry amidst fluctuating input costs, particularly crude oil and natural rubber prices. While crude prices have declined, natural rubber costs remain high, creating a challenging situation for the company. CEAT's management, represented by MD and CEO Arnab Banerjee, addresses potential price hikes and the demand across segments like agricultural and TBR tires. Despite raw material cost pressures, CEAT plans to navigate the situation with strategic expansions and adaptations. The conversation also covers market trends and the impact on the company's growth and profitability, especially in international and replacement markets.

Takeaways

• 📉 The company is experiencing a 50-50 situation with input costs: crude oil prices have decreased, but natural rubber prices have risen.
• ⛽ The management expects some moderation in raw material costs by Q3 if natural rubber prices drop below 200 per kg and crude oil derivatives pass through.
• 📊 CEAT has seen a 5% increase in raw material costs in Q1, driven primarily by domestic natural rubber prices, which are at a 15-year high.
• 📈 Despite price hikes, the company has not fully covered the increased raw material costs, and further price increases are expected in September.
• 🚜 The demand is strong in the two-wheeler segment with double-digit growth, but passenger vehicle growth is flat and truck category growth remains weak.
• 🔄 Replacement markets are performing better than the original equipment manufacturer (OEM) markets, especially in passenger and truck categories.
• 🌍 CEAT's international business, which constitutes 20% of its sales, is seeing strong order books, with expected double-digit growth in Europe and other geographies.
• 🌱 CEAT is expanding in the agriculture radial and truck bus radial (TBR) segments, with positive progress in product performance and range extension.
• 🛞 The tire sector is essential for all types of vehicles, with rubber and crude oil being the major cost components. Margins could improve if rubber prices stabilize.
• 📦 The replacement market is crucial for CEAT, alongside new market opportunities. The company is well-positioned with strong R&D in India and Germany.

Q & A

What is the current situation with CEAT's raw material costs?

CEAT's raw material costs are mixed. Crude oil prices have declined, but natural rubber prices have risen, impacting overall input costs.

How does CEAT plan to manage the increase in raw material prices?

CEAT is adopting a 'wait and watch' policy, considering price hikes if natural rubber prices don't stabilize. They have already implemented some price increases, with more expected in September.

What segments are showing the best demand for CEAT products?

The two-wheeler segment is experiencing double-digit growth. The passenger vehicle segment is flat, while the truck category hasn't seen much growth yet. Rural growth in two-wheelers is stronger than urban growth.

What is the outlook for CEAT's export market?

CEAT's international business, which accounts for 20% of its sales, has promising order books, especially in markets like Europe, where double-digit growth is expected.

How is CEAT progressing with capacity expansion in the agricultural and TBR segments?

CEAT has made significant progress in its agricultural radial tire expansion, and product performance in the TBR segment has been excellent. The company is optimistic about future growth in both segments.

What are the structural changes in the truck category impacting growth?

The truck category is facing structural changes in load patterns and vehicle sizes, which have limited growth in the OEM market. However, the replacement market is in a better position.

How has CEAT's two-wheeler segment performed post-COVID?

CEAT's two-wheeler segment has returned to 2019 levels after initially declining during the COVID period. It is now seeing strong double-digit growth.

What factors are impacting CEAT's pricing strategy?

CEAT's pricing strategy is influenced by competitive pressure in the tire industry and the need to cover rising raw material costs. Price hikes in September are anticipated to help offset these costs.

What is the long-term outlook for the replacement market for CEAT?

The replacement market is a significant part of CEAT's sales and is expected to remain robust, contributing to consistent demand across various vehicle categories.

What impact do changes in natural rubber prices have on CEAT’s profit margins?

If natural rubber prices drop to below ₹200 per kg, CEAT expects some moderation in raw material costs by Q3, which could positively affect profit margins.