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CEAT Ltd. saw a surge in its shares on Monday following the announcement of its acquisition of Camso’s off-highway construction equipment tire business
CEAT Share Price
CEAT Share Price: CEAT Ltd. saw a surge in its shares on Monday following the announcement of its acquisition of Camso’s off-highway construction equipment tyre business. The tire manufacturer disclosed the deal through an exchange filing after market hours on Friday.
As a result of the announcement, CEAT’s shares soared more than 11.5%, reaching Rs 3449.40, a new 52-week high, and bringing the company’s total market capitalization to nearly Rs 14,000 crore. The stock had closed at Rs 3,092.10 on Friday.
CEAT has entered into a definitive agreement to acquire the off-highway construction equipment tyre and track business of Camso from Michelin for $225 million. This acquisition includes the business, which generated $213 million in revenue in CY23, as well as two manufacturing facilities and global ownership of the Camso brand after an initial three-year licensing period.
Brokerage firms remain optimistic about CEAT’s prospects, with many forecasting a further 15-16% rally. Analysts are particularly positive about the company’s earnings per share (EPS) growth, driven by the acquisition and the expanded product portfolio.
JM Financial sees the deal as a strategic move to enhance CEAT’s presence in the off-highway tyre (OHT) market. The acquisition is expected to diversify CEAT’s product offerings and provide access to a global customer base. The firm estimates the acquisition to be EPS accretive and maintains a “buy” rating with a target price of Rs 3,500.
Investec also views the acquisition positively, noting that it will strengthen CEAT’s OHT business. The brokerage has a “buy” rating with a target price of Rs 3,750, citing the acquisition’s strategic alignment with CEAT’s goals.
Axis Capital maintains its “buy” rating and a target price of Rs 3,450, suggesting an 11% upside from the stock’s last closing price of Rs 3,086. The brokerage believes the acquisition is reasonably priced, though it cautions that integration could be challenging and might impact the balance sheet.
IIFL Securities highlights the deal’s strategic fit and reasonable valuation, projecting a 7-8% EPS accretion by FY26. The firm believes the acquisition could trigger a re-rating of CEAT’s stock and has set a target price of Rs 4,000 with a “buy” rating.
In contrast, Nomura is less bullish, projecting a more modest 10% EPS accretion from the acquisition. It has given the stock a “neutral” rating with a target price of Rs 3,051, citing the longer-term benefits from an expanded OHT portfolio and access to Camso’s network.
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