CEAT Ltd saw its shares rise on Monday after announcing the acquisition of Camso’s off-highway construction equipment tire business.
CEAT Share Price: CEAT Ltd saw its shares rise on Monday after it announced the acquisition of Comso’s off-highway construction equipment tire business. The tire manufacturer disclosed the deal through an exchange filing after market hours on Friday.
Following the announcement, CEAT shares rose over 11.5% to Rs 3,449.40, a new 52-week high, and the company’s total market capitalization touched 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 Camso’s off-highway construction equipment tire and track business from Michelin for $225 million. The acquisition includes the business, which generated revenues of $213 million in CY23, as well as two manufacturing facilities and global ownership of the Camso brand after an initial three-year licensing period.
Brokerage firms are optimistic about CEAT’s prospects, with many predicting another 15-16% rally. Analysts are particularly positive about the company’s earnings per share (EPS) growth, driven by acquisitions and an expanded product portfolio.
JM Financial views this agreement as a strategic move to increase CEAT’s presence in the off-highway tire (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 targets.
Axis Capital has maintained its “buy” rating and target price of Rs 3,450, suggesting an upside of 11 percent from the stock’s last close of Rs 3,086. Impact the balance sheet.
IIFL Securities highlights the deal’s strategic fit and reasonable valuation, expecting 7-8% EPS growth 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, offering a modest 10% EPS accretion over acquisitions. It has given the stock a “neutral” rating with a target price of Rs 3,051, citing the long-term benefits of Camso’s expanded OHT portfolio and network access.
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