India`s MRF Q3 profit jumps three-fold on uptick in two-wheeler sales
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Indian tyre maker MRF reported a three-fold rise in third-quarter profit on Friday, helped by an uptick in two-wheeler sales.
MRF, the country's top tyre maker and the most expensive stock, said its profit from continuing operations for the three months ended Dec. 31 rose to 5.08 billion rupees (around $61 mln) from 1.69 billion rupees.
The results are largely in line with those of other tyre makers, who reported profits that grew between 70% and 400%.
Analysts said MRF, unlike fierce competitors JK Tyre and CEAT, had not been able to hike prices during the quarter. Instead, the company benefited from a rebound in two-wheeler sales and replacement demand, a key sales driver for tyre makers in the country.
Two wheeler sales were up around 23% year-on-year in the third-quarter, the fastest growth so far this fiscal, helped by a revival in rural demand.
This helped it make up for sluggish sales in the bus and truck segments, in which MRF has a higher exposure compared to rivals, and drove revenue up an industry-leading 9.3%.
"It would be tough for the industry to hike prices easily going ahead due to major raw material basket inflation and thus result in margin mean reversion," ICICI Securities said in a note in late December.
Total expenses rose a modest 1%, with raw material costs dipping slightly.
The company's shares, which have been near record levels for the last few months, were down 1% earlier in the session and fell 3% after the results.
($1 = 82.9875 Indian rupees)
