Why is CEAT falling/rising?

Recent Price Movement and Market Context

CEAT’s share price has demonstrated notable strength over multiple time horizons. In the past week, the stock gained 5.24%, significantly outperforming the Sensex, which declined by 0.40% during the same period. Over the last month, CEAT posted a modest 0.91% gain while the benchmark index fell by 0.30%. Year-to-date, the stock has surged 21.22%, more than doubling the Sensex’s 8.69% rise. Over one year, CEAT’s returns stand at an impressive 26.01%, substantially outpacing the Sensex’s 7.21% gain. This outperformance extends over longer periods, with three-year returns exceeding 120%, compared to the Sensex’s 37.41%, and a five-year return of nearly 253%, dwarfing the benchmark’s 80.85%.

On 19-Dec, CEAT’s intraday high reached ₹3,965.10, marking a 5.95% increase, and the stock has been on a two-day consecutive gain streak, accumulating a 5.55% return in that span. The price is trading above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating strong technical momentum. Despite this, investor participation has slightly declined, with delivery volumes on 18-Dec falling by 12.36% compared to the five-day average, though liquidity remains adequate for trades up to ₹0.51 crore.

Fundamental Strength Underpinning the Rally

CEAT’s recent price appreciation is underpinned by solid fundamental metrics. The company has delivered healthy long-term growth, with net sales expanding at an annual rate of 16.86% and operating profit growing at 16.30% annually. The latest quarterly results for September 2025 were particularly encouraging, with the operating profit to interest ratio reaching a peak of 5.79 times, signalling strong operational efficiency and debt servicing capability.

Profit after tax (PAT) for the quarter stood at ₹185.95 crore, reflecting a remarkable 61.6% increase compared to the average of the previous four quarters. Additionally, the company declared its highest-ever dividend per share (DPS) of ₹30.00 for the year, highlighting management’s confidence in sustained cash flow generation and shareholder returns.

CEAT’s return on capital employed (ROCE) is a healthy 13.2%, and the stock is attractively valued with an enterprise value to capital employed ratio of 2.5. This valuation is discounted relative to its peers’ historical averages, making it an appealing proposition for value-conscious investors. However, it is noteworthy that despite the strong share price performance over the past year, the company’s profits have declined by 12.6%, suggesting some caution in earnings momentum.

Institutional investors hold a significant 37.26% stake in CEAT, indicating strong backing from sophisticated market participants who typically conduct rigorous fundamental analysis before committing capital. This institutional interest often lends stability and credibility to the stock’s upward trajectory.

Consistent Outperformance and Market Recognition

CEAT’s consistent returns over the last three years have been remarkable, with the stock outperforming the BSE500 index in each of the past three annual periods. This sustained performance has earned CEAT a prestigious ranking among the top 1% of all 4,000 stocks rated by MarketsMojo, placing it 16th among small-cap companies and 44th across the entire market. Such recognition reflects the company’s strong fundamentals, growth prospects, and investor appeal.

In summary, CEAT’s recent price rise is a result of a combination of strong quarterly earnings growth, attractive valuation metrics, robust long-term sales and profit expansion, and positive technical indicators. While some caution remains due to the recent dip in profits over the past year, the stock’s overall momentum and institutional support suggest continued investor confidence.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →