News

Published: November 6, 2023
Updated: November 6, 2023

MRF's Impressive Fivefold Profit Surge in Q2 2023

MRF, the Chennai-based tire manufacturer, witnessed a remarkable fivefold increase in its net profit for the September quarter of FY2024. This soaring profit is attributed to a boost in operating margins during the July-September period.

Breaking Down the Profits:

In an exciting turn of events, MRF Ltd. reported a net profit of ₹571.9 crore for Q2 2023, compared to ₹123.9 crore in the same period last year. This astonishing growth comes as a pleasant surprise to investors and industry enthusiasts alike.

Dividends for Shareholders:

The company's board has generously declared an interim dividend of ₹3 per equity share. Mark your calendars for November 17th, as that's the record date for the distribution of this dividend. Shareholders can look forward to reaping the rewards of MRF's success.

Falling Slightly Short of Expectations:

While MRF's stellar performance is commendable, it fell slightly short of Bloomberg analysts' estimate of ₹587.8 crore. This deviation from predictions led to a marginal dip in MRF's stock price, which closed at ₹107,723.25 apiece on NSE, down by 2.5%.

Revenue Growth Amidst Challenges:

During the second quarter, marked by high crude oil prices (a key raw material for tires), MRF's revenue rose by 6% year-on-year, reaching ₹6,087.56 crore. This remarkable growth was compared to ₹5,719 crore a year ago.

Operational Efficiency:

MRF's cost of materials consumed during the September quarter was approximately 10% lower at ₹3,715.28 crore, compared to ₹4,112.98 crore in the previous year's September quarter. This demonstrates the company's commitment to operational efficiency and cost control.

EBITDA Soars:

The company's operating income (Earnings Before Interest, Taxes, Depreciation, and Amortization or EBITDA) surged by an impressive 141% to ₹1,129 crore in the September quarter, compared to ₹467.4 crore in the same period the previous year. This remarkable increase in EBITDA is a testament to MRF's strong financial performance.

Expanding Margins:

MRF's EBITDA margin witnessed a substantial expansion, growing from 8.2% in Q2 of FY2023 to a remarkable 18.5% during the September quarter. This margin expansion reflects the company's efforts in enhancing profitability.

Controlled Expenses:

Expenses during the September quarter decreased by 4% to ₹5,383.7 crore, compared to ₹5,630.3 crore in the corresponding period last year. This cost control is another factor contributing to MRF's impressive financial results.

Embracing Electric Vehicles:

MRF Ltd. is not resting on its laurels. The company is actively exploring new technologies to develop a range of electric vehicle (EV) tires. With the EV market on the rise, MRF is focused on creating tires with characteristics such as ultra-low rolling resistance, excellent traction, wear resistance, and noise suppression. These innovative EV tires position MRF to capture a significant share of the growing EV market.

MRF performs better , though misses analysts expectations

MRF's astounding fivefold profit growth in Q2 2023 underscores the company's resilience and adaptability in a dynamic market. While slightly missing analyst expectations, MRF's ability to control costs, expand margins, and venture into the EV market promises a bright future for this iconic tire manufacturer.