CEAT shares down 12% from one-year high; time to buy, sell or hold?

Shares of CEAT Ltd rose sharply in Tuesday's trade after the tyremaker recorded strong growth in second-quarter (Q2) profit for the financial year 2023-24 (FY24). The stock jumped 11.07 per cent to hit a day high of Rs 2,333.90 over its previous close of Rs 2,101.30. At today's high price of Rs 2,333.90, the scrip has slipped 11.60 per cent from its 52-week high of Rs 2,640, a level seen on July 10, 2023. Despite the mentioned fall, the counter has gained 71.91 per cent from its one-year low price of Rs 1,357.60, hit on March 20 this year.

The Mumbai-based company posted a consolidated net profit of Rs 208 crore for the quarter ended September 30, compared with Rs 7.83 crore a year earlier. Sequentially, CEAT's revenue rose 5.5 per cent to Rs 3,053 crore in Q2 FY24. On a standalone basis, the company's revenue stood at Rs 3,043 crore and EBITDA (Earnings before interest, taxes, depreciation, and amortization) margin came at 15 per cent.

Arnab Banerjee, MD & CEO at CEAT, said CEAT is witnessing mid-single-digit topline growth in its all three segments – replacement, OEMs (Original Equipment Manufacturers), and international business.

Technical analysts said support on the counter could be seen at Rs 2,150, followed by Rs 2,080 and Rs 2,057 levels.

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has been consolidating near Rs 2,150 zone. It has currently moved beyond Rs 2,180 level, showing signs of improvement. A decisive close above Rs 2,210 will further strengthen the bias. The RSI (Relative Strength Index) is well placed. The near-term support is maintained at Rs 2,080-2,100 zone and only a decisive breach below can negate this view."

Ganesh Dongre, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers, said, "On daily charts, CEAT stock has seen a trendline breakout at Rs 2,210. Traders can enter in this stock with a stop loss of Rs 2,150 for a target price of Rs 2,400 over the upcoming weeks."

DRS Finvest founder Ravi Singh said investors can expect a target price of Rs 2,500 with a stop loss at Rs 2,100.

AR Ramachandran from Tips2trades said, "CEAT looks bearish on daily charts with strong resistance at Rs 2,276. A daily close above this resistance could lead to target of Rs 2412. Support will be at Rs 2,057."

CEAT is the flagship company of $4.4 billion RPG Enterprises. It has presence in global markets as well. The stock trimmed a major chunk of its gains as the session progressed today was last seen trading with 3.62 per cent gains at Rs 2,177.45.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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