Earnings Outlook
Higher raw material costs to weigh down MRF's Jan-Mar PAT
This story was originally published at 21:13 IST on 5 May 2025
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By Ishaan Sharma
Mumbai – Leading tyre manufacturer MRF Ltd.'s March quarter earnings are expected to decline on year, primarily due to an increase in rubber prices that have remained high since the previous quarter.
For the latest quarter, the net profit of the company is seen contracting 7% on year to INR 3.55 billion, according to an average of estimates from five brokerages. The estimates for net profit range from INR 4.24 billion by Anand Rathi Share and Stock Brokers Ltd. to INR 3.27 billion by Motilal Oswal Financial Services Ltd. Sequentially, the net profit of the company is expected to rise 15.6%.
This is in contrast to the year-ago quarter when the company recorded a 30% on-year growth in the net profit due to relatively lower prices of natural rubber. According to Emkay Global Research, domestic rubber prices were INR 192 per kilogram in the latest quarter, compared with INR 167 per kilogram in the same period of 2024. The company consumed total raw materials of INR 46.34 billion for the last quarter.
The company's net sales are expected to rise almost 13% on year to INR 70.14 billion for the quarter ended March, the average of estimates from five brokerages showed. The lowest estimate for the top line was INR 69.41 billion by Motilal Oswal, while the highest was INR 70.9 billion by Equirus Securities Pvt Ltd. Sequentially, the net sales are expected to rise 2%.
Kotak institutional Equities expects the company's revenue to rise 13% on year on account of volume uptick in two-wheeler and passenger car radial tyre replacement segments, gains in the market shares due to aggressive pricing strategy, and price cuts made by the company in the past year.
The company's earnings before interest, tax, depreciation, and amortisation for the March quarter are expected to be in the range of INR 8.27 billion to INR 8.54 billion, estimates from four brokerages showed.
Brokerages expect the company's EBITDA margin to contract by 210-420 bps on year, factoring in the increase in raw material prices. The company will detail its March quarter results on Wednesday.
On Monday, shares of the company settled at INR 136,120 on the National Stock Exchange, up 0.7%. The stock is up 18.5% from the closing price on Feb. 6, when MRF detailed its December quarter earnings. In the December quarter, the company's net profit had declined 40% while its revenue risen 14% on year. Of the three brokerage reports on the company available with Informist, one has a 'buy' rating on the stock, while the remaining two have a 'sell' rating on the stock.
Following are the Jan-Mar earnings estimates for MRF based on reports from five brokerage firms in descending order of net profit estimate (in INR million):
Brokerage Name | Net Sales | Net Profit | EBITDA |
Anand Rathi Share and Stock Brokers Ltd | 70,552.00 | 4,242.00 | |
Kotak Institutional Equities | 70,319.00 | 3,520.00 | 8,507.00 |
Equirus Securities Pvt Ltd | 70,889.00 | 3,407.00 | 8,542.00 |
Elara Securities (India) Pvt Ltd | 69,520.00 | 3,288.00 | 8,273.00 |
Motilal Oswal Financial Services Ltd | 69,413.00 | 3,272.00 | 8,306.00 |
Average | 70,138.60 | 3,545.80 | 8,407.00 |
End
Edited by Akul Nishant Akhoury
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