MRF Results: Net Profit, Dividend and Share Price Outlook
Last updated: 08 Jun, 2021 | 10:44 am
Bottomline impacted by lockdowns: MRF has reported a 51% fall in consolidated net profit to Rs 332 crore in Jan- Mar 21, as the second wave of the pandemic led to lockdowns across the country hurting its business. The tyre industry has been facing demand problems emanating from the crisis that the automobile sector has been confronting for some time. The pandemic has amplified the already troubled sector.
Topline rises: MRF’s revenue rose by around 31% to Rs 4,816 crore in the period. Revenue from operations for the last fiscal stood at Rs 16,163 crore as against Rs 16,239 crore in 2019-20. The topline growth was aided by recovery in OEMs and replacements. However, the lockdown capped overall growth in the period.
Final Dividend: MRF has now completed 75 years of establishment of Madras Rubber Factory (which was originally established in 1946 as a proprietorship concern for manufacture of toy balloons). During the year 1960, it was converted into a limited company after which it started manufacture of automotive tyres and tubes. To celebrate the occasion, MRF has announced a special dividend. Apart from this, the company's board has recommended a final dividend of Rs 94 per share. The total dividend for the financial year ended March 21, 2021, (including the special dividend) works out to Rs 150.
Outlook going forward: The second phase of the pandemic has affected MRF’s business due to the continuing lockdown in different parts of the country. It is hoped that in a month or two the situation across the country will turn more stable enabling the business to get back to normalcy, MRF said.
Macquarie downgrade: Following the announcement of the results, global brokerage firm Macquarie has downgraded the shares to ‘Neutral’ with a target price of Rs 90,000. Macquarie noted that commodity cost pressures have been major headwinds for MRF in the Jan-Mar 21 period. Also, the stock appears to be fully valued at the current levels, with limited upside potential. Macquarie has lowered EPS estimates by 14% in FY22.