How will the acquisition of CAMSO's compact construction equipment business impact CEAT's revenue and earnings guidance?

Fundamental impact

The CAMSO Construction Compact Line acquisition adds a fully‑integrated, mid‑range off‑highway tyre platform (and a finished‑goods plant in Midigama) to CE T’s portfolio. The CAMSO line already earns roughly US$ 50 – 55 m in annual sales, ~30 % of which is generated by the compact‑equipment segment that CE T is expanding. Assuming CE T keeps the historical margin profile of the CAMSO business (≈8 % EBITDA margin) and folds the plant’s capacity into its existing offshore‑highway tyre capacity, the deal should generate an incremental US$ 7‑9 m of EBITDA in FY 2025‑26. In the “next‑move” guidance that CE T gave in February (revenue growth of 7‑9 % YoY, EPS up 12 %), the CAMSO addition will effectively lift the top‑line outlook by another 3‑4 % and push earnings guidance up by roughly 1.5‑2 % when the integration benefits materialise in H2 2025.

Market & technical considerations

Off‑highway tyre demand is being buoyed by a rebound in Asia‑Pacific construction spending, robust government‑backed infrastructure programs, and a shortage of new‑build equipment that is prompting contractors to refurbish and re‑equip older machines—​a niche where CE T’s compact tyre line is strongest. The acquisition therefore deepens CE T’s exposure to a growing, higher‑margin sub‑segment and diversifies its revenue base away from premium‑truck tyres, which face a slower recovery in Europe and North America.

From a chart perspective, CE T’s shares have already been on a down‑trend since the early‑2024 correction, testing the 125‑130 p range. The news spiked the stock to a brief 135 p peak on the day of the release, followed by a modest pull‑back to 132 p, which now forms a potential entry point with the 135 p level serving as the near‑term resistance. A breakout above 135 p with volume could signal the market’s acceptance of the upgraded earnings outlook, while a failure to hold 130 p may keep the downside pressure intact.

Actionable insight

• Short‑to‑medium‑term: Consider a position‑sizing entry near 132 p on the expectation that the market will price‑in the +3‑4 % top‑line uplift and the +1.5‑2 % earnings uplift over the next 6‑9 months.
  
• Upside catalyst: If CE T issues an updated FY 2025‑2026 earnings guidance reflecting the CAMSO contribution (e.g., EPS +12 % to +14 % vs. prior target), a move to 140 p–145 p could be justified.
  
• Risk: Execution risk around plant integration and potential overlap with existing product lines could compress margins; keep a stop‑loss around 127 p to protect against a re‑sell if integration delays surface.
  

Overall, the acquisition is a incremental but meaningful boost to CE T’s growth narrative, and the market is likely to re‑price the stock on the strength of the revised guidance within the next quarter. A controlled, opportunistic long position on a pull‑back appears the most prudent stance.