MRF Ltd., one of India’s leading tyre manufacturers, recently announced its financial results for the September quarter (Q2 FY2024), revealing a mixed performance. The company’s net profit fell sharply, but its revenue saw healthy growth. Here’s a breakdown of the key numbers and what they mean for investors and stakeholders.
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MRF Share Q2 Results
| Parameter | Q2 FY2024 | Q2 FY2023 | Change (%) | Analyst Estimate |
|---|---|---|---|---|
| Net Profit | ₹455 crore | ₹572 crore | -20.40% | ₹434 crore |
| Revenue | ₹6,760 crore | ₹6,087.6 crore | 0.111 | ₹6,850 crore |
| EBITDA | ₹973.6 crore | ₹1,134 crore | -14% | ₹960 crore |
| EBITDA Margin | 14.40% | 18.50% | -4.1% pts | - |
| Dividend Declared | ₹3 per share | - | - | - |
| Record Date for Dividend | November 19, 2024 | - | - | - |
| Stock Price (Post Results) | ₹1,19,026 | - | -1.60% | - |
| Stock Performance (YTD) | -8% | - | - | - |
| Stock Performance from Recent Peak | -22% | - | - | - |
Profit Declines 20.4%
For the quarter, MRF reported a net profit of ₹455 crore, which represents a decline of 20.4% compared to the same period last year, when the company posted a net profit of ₹572 crore. This drop in profit was largely due to higher costs and margins being under pressure. However, the reported figure was slightly better than the analyst estimates, which had pegged net profit to be around ₹434 crore.
Revenue Rises by 11%
On the upside, MRF’s revenue grew by 11.1% year-on-year, reaching ₹6,760 crore for the September quarter. This is an improvement over the ₹6,087.6 crore reported in Q2 FY2023. Despite this growth, the company’s revenue fell slightly short of analyst expectations, which had predicted a figure of around ₹6,850 crore.
EBITDA and Margin Pressure
The company’s Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) declined by 14% to ₹973.6 crore compared to ₹1,134 crore in the same quarter last year. As a result, EBITDA margins narrowed significantly by over 400 basis points, dropping from 18.5% to 14.4%. This is a sign that although MRF is generating higher revenues, its operational efficiency and profitability have been impacted by increased costs. Despite the margin squeeze, the company’s EBITDA was still in line with analysts’ expectations of around ₹960 crore.
Dividend Announcement
In addition to the financial results, MRF also declared an interim dividend of ₹3 per share for its shareholders. The record date for the dividend has been set for November 19, 2024, and the dividend will be paid on or after November 29, 2024.
Stock Performance
Following the results, MRF’s share price saw a slight dip. The stock was trading 1.6% lower at ₹1,19,026 at the time of the announcement. Over the last few months, the stock has experienced a 22% correction from its recent high of ₹1,51,445. So far this year, MRF’s stock has dropped by about 8%.
Key Takeaways:
- Net profit declined by 20.4%, but was slightly better than analysts’ expectations.
- Revenue grew by 11.1%, signaling strong sales despite cost pressures.
- EBITDA and margins were under pressure, reflecting higher operational costs.
- Dividend of ₹3 per share declared, which is a positive sign for investors.
- MRF’s stock price has seen a significant correction, down 22% from its peak, and 8% on a year-to-date basis.
What’s Next for MRF?
While MRF’s revenue growth shows the resilience of its business, the decline in profitability and shrinking margins are points of concern. Investors will be watching the company closely in the coming quarters to see if it can manage costs better and return to stronger profitability.
For now, the company’s decision to maintain a dividend payout is a positive sign for shareholders looking for consistent returns, even in challenging times. However, the stock’s performance in the market indicates that investors are cautious about the company’s near-term prospects.