CEAT share price jumped over 10% to hit a record high after the company announced entering into a definitive agreement to acquire Camso brand’s Off-Highway construction equipment bias tyre and tracks business from Michelin in an all-cash deal valued at about $225 million.
The transaction will include the business with revenues of around $213 million for CY 2023 and global ownership of the Camso brand along with two manufacturing facilities.
“The acquisition will expand CEAT’s product portfolio in the high margin Off-Highway Tyres (OHT) and tracks segments, which includes agriculture tyres and tracks, harvester tyres and tracks, power sports tracks and material handling tyres,” CEAT said in regulatory filing on December 6.
The Camso brand will be permanently assigned to CEAT across categories after a 3-year licensing period.
“The Camso brand is an excellent fit with the growth strategy of CEAT’s Off-Highway Tyre business, thereby improving our margin profile,” said Arnab Banerjee, MD & CEO, CEAT.
Brokerage firm Motilal Oswal Financial Services (MOFSL) believes that CEAT’s management has strategically focused on increasing its share in segments like two-wheelers, Passenger Vehicles (PVs), and off-highway to enhance margins and reduce reliance on the truck segment.
“The acquisition will help further bolster its presence in the global OHT segment. However, given the deal size, it is likely to increase leverage (0.45x D/E and 1.2x D / EBITDA as of Sep’24 end) for the company, particularly amid a moderate demand cycle in most segments. The stock trades at 17.5x/13.5x FY26E/FY27E EPS,” MOFSL said.
CEAT Share Price Trend
CEAT share price has gained 20% in one month and more than 39% in the past six months. The stock has delivered over 41% returns year-to-date (YTD). This compares with the benchmark Sensex’s 6.2% gains in six months and 12.7% rally YTD.
At 10:00 AM, CEAT shares were trading 10.32% higher at ₹3,411.15 apiece on the BSE.
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