CEAT Ltd, a homegrown tyre manufacturer, anticipates a reduction in the pressures from high raw material costs in the second half of the fiscal year, following a challenging period marked by domestic natural rubber prices reaching a 15-year high. Arnab Banerjee, the company's Managing Director and CEO, shared insights on the company's performance and outlook, noting that natural rubber prices surged to approximately Rs 250 per kg in the first half of the fiscal.
Banerjee expressed optimism for an improvement in the fourth quarter, stating, "We hope to see an improvement in Q4. I think the pressure is going to ease off in the second half of the year." He noted that rubber prices have since decreased to about Rs 200 per kg, with an expected increase of 1.5% to 2% in the third quarter compared to the second quarter, following a 6% rise from the first quarter to the second quarter.
On the growth outlook, Banerjee highlighted the robust performance of CEAT's aftermarket business, which has seen double-digit growth in the first half of the year. He mentioned that while the original equipment manufacturer (OEM) segment has been subdued due to a transition in vehicles, a recovery is expected in the second half. The replacement segment is also projected to grow in double digits.
Additionally, the international business, which faced challenges in the second quarter due to container shortages and high freight costs, is expected to recover. Banerjee indicated that the order base remains strong and that the availability of containers has improved, though freight rates remain high but are anticipated to decrease compared to the second quarter.
