Jan. 24, BENGALURU (Reuters) - The third-quarter earnings for Indian tire manufacturer CEAT exceeded expectations due to increased margins and price increases that offset rising raw material costs and a sluggish recovery in sales growth.

For the quarter that concluded on December 31, CEAT's consolidated net profit increased by more than five times to 1.81 billion rupees, or almost $22 million. According to LSEG data, analysts had projected an average profit of 1.24 billion rupees.

For the second consecutive quarter, the firm raised the price of its tires. This allowed them to increase its profit margins from 1.3% to 6.1% from a year earlier, despite this quarter's increase in raw material prices.
In response to the increase in crude oil prices, rubber prices—a crucial component in the production of tires—ended the quarter higher. Costs increased by 2.5% overall, with raw material costs rising by over 3%.

In a note published in late December, ICICI Securities stated that "it would be tough for the industry to hike prices easily going ahead due to major raw material basket inflation and thus result in margin mean reversion."

The tire manufacturer, whose customers include Mahindra & Mahindra and Maruti Suzuki, saw a roughly 9% increase in revenue to 29.63 billion rupees, exceeding analysts' projections of a 6% increase.
After six consecutive quarters of declining growth from July–September 2022, when it saw a phenomenal rise of 47.8%, CEAT is experiencing higher revenue growth this quarter for the second time.
Among the big tire manufacturers, a Mumbai-based company is the first to submit results.

Rivals Apollo Tyres and JK Tyre will disclose their results the next week, and the most expensive stock in the nation, MRF, will announce its quarterly results the following month.
CEAT stock closed 4.4% higher prior to the release of the findings. The December quarter saw a 14% increase in them.