(Reuters) -Indian tyre maker MRF reported a nearly 14% drop in first-quarter profit on Tuesday, pressured by higher rubber costs.
Company’s net profit fell to 4.84 billion rupees ($55.24 million) for the quarter ended June 30, compared with 5.63 billion rupees last year.
Revenue from operations rose 6.8% to 75.6 billion rupees, while total expenses increased 9.8%, driven largely by a 6.4% rise in the cost of materials consumed, which accounts for more than half of overall expenses.
Shares of MRF dropped 3.5% following the earnings announcement.
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KEY CONTEXT
Tyre manufacturers such as MRF, which supplies to automakers including Hyundai Motor India and Bajaj Auto, rely heavily on vehicle sales for a significant portion of their revenue.
Total vehicle sales in the country slipped 5.1% in the reported quarter, compared with a 16.4% growth in the year-ago period.
A surge in domestic rubber prices weighed on tyre manufacturers’ first-quarter earnings, analysts said.
Rivals CEAT missed its quarterly profit estimate last month, while Goodyear India reported a lower profit on Monday, pressured by weak auto demand.
PEER COMPARISON
Valuation Estimates (next 12 Analysts’ sentiment
(next 12 months)
months)
RIC PE EV/EBI Revenue Profit Mean # of Stock to Div yield
TDA growth(%) growth(%) rating* analysts price (%)
target**
MRF Ltd MRF.NS 26.06 11.94 9.01 18.27 Sell 4 1.07 0.17
CEAT Ltd CEAT.NS 15.97 7.11 13.16 36.31 Buy 17 0.80 0.96
JK Tyre & Industries Ltd JKIN.NS 11.12 6.73 7.32 31.56 Buy 5 0.78 0.94
Apollo Tyres Ltd APLO.NS 14.76 7.25 6.87 28.27 Buy 23 0.88 1.14
* 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.
APRIL-JUNE STOCK PERFORMANCE
– All data from LSEG
— $1 = 87.6160 Indian rupees
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Sherry Jacob-Phillips)
