Last updated: 10 Aug, 2021 | 02:53 pm
Consolidated Revenue: Rs 4184 cr (up 70% YoY/ Down 13% QoQ)
Consolidated Net Profit: Rs 166 cr (up 1086% YoY/ Down 50% QoQ)
EBITDA Margin: 11.8% (Down 180 bps YoY/ Down 390 bps QoQ)
MRF’s competitive positioning within the sector has weakened over the past few years, which is also indicated from the dilution of pricing power in the PCR and TBR segments. This, coupled with the impact of capex over the last three years, has resulted in weak return ratios. However, cyclical recovery in both OEMs and replacement would lead to higher utilization of new capacities (Gujarat plant) and drive the benefit of operating leverage. Also, consistent price hikes being taken by all players in the industry will lead to better margins in the second half of FY22.
Following the earnings, Motilal Oswal has retained a ‘Neutral’ rating on the shares with a target price of Rs 83,730. Following the lacklustre earnings, MRF shares ended 1.6% lower at Rs 78.800 on NSE. The brokerage firm expects margins and RoE to remain under pressure over FY21–23E. The company expects a ~9% EBITDA CAGR over FY21–23E, with margins contracting ~100bp to 17.2%. PAT growth would be stronger (~13% CAGR) over FY21–23E, according to its estimates.