| Company | Value | Change | %Change |
|---|
CEAT will acquire Camso Brand’s off-highway construction equipment tyre and tracks business, as per the agreement.
The cost of the acquisition is said to be $225 million and the brand will be assigned to CEAT after a three-year licensing period.
The all-cash transaction is likely to be completed within the next six to nine months.
Brokerage firm Investec maintained its “buy” recommendation on CEAT with a price target of ₹3,750. The stock is Investec’s “preferred pick”within the tyre segment.
The brokerage said that the acquisition is a step in the right direction and will help fast track CEAT’s growth in the specialty tyre segment.
However, Nomura remains “neutral” on CEAT with a price target of ₹3,051, saying that Camso’s segments are niche and that the long-term growth potential is likely to be modest.
An attractive valuation can drive up to 10% Earnings Per Share (EPS)-accretion along with longer term benefits from a wider Off highway trucks portfolio and access to Camso’s network.
In an interaction with CNBC-TV18 on Monday, December 9, CEAT CEO Anant Goenka said that the larger acquisition of the Camso Brand acquisition can be seen from calendar year 2026 and that some uptick on margins can be seen post the deal.
However, for the current financial year, Goenka expects margins to see some pressure due to the rise in rubber prices.
Goenka also said that going forward, 25% of the total business will be in the Off-highway truck segment, which will garner higher margins.
Among the 23 analysts that have coverage on CEAT, 15 of them have a “buy” recommendation, three say “hold,” while five of them have a “sell” rating on the stock.
Shares of CEAT are currently trading 7% higher at ₹3,310. The stock has seen gains of over 36% so far in 2024.
