Ceat is on a roll today! Know why

Shares of Ceat Ltd, a mid-sized maker of automotive tyres, surged to a 3-month high after the company reported stellar quarterly numbers where earnings jumped owing to a sharp dip in raw material costs.

Ceat said its first quarter net profit jumped 134 percent to 121 crore rupees compared with the year ago quarter. Sales for the same period remained flat at `1,456 crore rupees. Ceat said its Operating margin expanded to 15.9 percent during the April-June quarter compared with 9 percent a year ago because input costs such as synthetic rubber fell sharply. A better product mix also contributed to higher margins.

Ceat leapt 38 rupees, or 4.9 percent, to 817 rupees, its highest level since April 23rd, on the National Stock Exchange, where 13 lakh shares were traded in the first two hours of trade compared with a 5-day average of 7.4 lakh shares.

Ceat's market capitalization has jumped 41 percent to `3,300 crore rupees in the past year as a global drop in commodity prices have helped an expansion of margins in such companies.

(Image credit: Indiatimes)