Ceat Ltd.

“CEAT is a volume-growing Indian tyre manufacturer with a defensible two-wheeler replacement brand and India structural tailwinds, but its economics are structurally average — commodity pass-through exposure, near-zero free cash flow across a five-year capex cycle, incremental ROIC barely at cost of capital, and no durable pricing power. Trading at 13.5x forward earnings near 52-week lows, the valuation is fair for the quality delivered, not cheap enough to compensate for the structural ceiling. The FCF recovery thesis is plausible as the capex cycle ends, but repeated commodity-driven resets undermine conviction. This is a reasonable hold for existing owners but insufficient as a new position when better risk/reward alternatives exist.”