Ceat Identified as Strong in OTR Sector
The online stock broking firm India Infoline has recommended Ceat Ltd as a recommended buy only a day or so after making a similar recommendation regarding Apollo Tyre. India Infoline describe Ceat as a ‘diversified tyre major’ who is ‘ramping up its production facilities to benefit from the uptrend in [the] automobile industry,’ and claims the tyremaker has plans in the pipeline that will see its OTR capacity more than doubled from 40,000 to 100,000 units per year.
Tyres & Accessories has previously reported on the company’s intention to establish three new greenfield facilities, one of which would function as a ‘speciality tyre’ plant for OTR tyres. In addition to OTR investment Ceat intends to spend Rs200 million (£2.4 million) upgrading its passenger car tyre production facilities and increasing output in this segment.
Ceat parent company RPG Enterprises claim that the tyremaker holds a 31 per cent share of earthmover tyre production in India, making it one of the largest participants in the market. Sales of OTR tyres and export sales provide greater margins than the OEM segment, and with Ceat’s focus on OTR sales, India Infoline anticipate the company’s operating margin to increase during the next two years.