Indian tyre maker MRF`s quarterly profit more than doubles on higher demand
Indian tyre maker MRF said on Friday its third-quarter profit more than doubled from a year earlier, as lower tax boosted demand both from vehicle manufacturers as well as buyers seeking to replace ageing tyres.
Profit rose to 6.79 billion rupees ($75.10 million) in the quarter ended December 31 from 3.07 billion rupees a year earlier.
Revenue from operations rose 15.3% to 79.34 billion rupees, while total expenses increased 7.8%, driven largely by a one-time exceptional cost of 772 million rupees related to India's new labour codes.
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KEY CONTEXT
Tyre makers including MRF, which supply to auto manufacturers such as Hyundai Motor India and Bajaj Auto, depend heavily on automobile demand for a major share of their revenue.
In the final quarter of last year, Indian tyre makers benefited from the government's broad tax revisions in September, which reduced levies on most tyres to 18% from 28%.
Total vehicles sales in the country increased 17.6% in the reported quarter, with cars and two-wheelers sales rising 20.6% and nearly 17%, respectively.
Analysts said the revenue increase was driven by stronger demand in both the replacement market, change old or worn-out tyres with new ones, and the original equipment segment.
Peer CEAT reported a jump in its third-quarter profit last month, while Apollo Tyres reported a 39.5% rise in its quarterly profit on Thursday.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts' sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean # of Stock to price Div
growth (%) growth (%) rating* analysts target** yield
(%)
MRF Ltd MRF.NS 22.65 10.96 8.56 20.93 SELL 4 0.94 0.17
CEAT Ltd CEAT.NS 18.11 7.97 13.50 28.90 BUY 14 0.92 0.77
JK Tyre & JKIN.NS 15.40 8.95 7.96 23.03 HOLD 5 1.10 0.56
Industries Ltd
Apollo Tyres Ltd APLO.NS 17.08 7.64 7.17 31.15 BUY 23 0.90 0.99
* The mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
-- All data from LSEG
-- $1 = 90.4160 Indian rupees
