Fitch affirms Ceat Kelani at ‘AA+(lka)’

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Fitch Ratings has affirmed Sri Lanka-based tyre manufacturer Ceat Kelani Holdings Pvt Limited’s (CKH) National Long-Term Rating at ‘AA+(lka)’. The Outlook is Stable.

The affirmation and Stable Outlook reflect our view that CKH’s rating will be able to weather declining sales volume and profitability in the next 12 months amid a deteriorating domestic economy, Fitch Ratings said. CKH has an exceptionally strong balance sheet, with cash exceeding debt, and solid liquidity.

“We believe the company will continue to gain market share at the expense of importers, as the country has deprioritised finished goods imports given its foreign currency shortage. This, together with an increase in CKH’s exports, should mitigate the drop in domestic demand,” they added.

CKH’s rating reflects its position as a leading domestic manufacturer of vehicle tyres and its strong financial profile. These strengths are counterbalanced by CKH’s exposure to price sensitive and competitive end markets and margin pressure stemming from commodity price fluctuations.