Motilal Oswal sees 23% downside for MRF post Q2 results; Should you sell?

MRF reported a net profit of ₹525.64 crore in the second quarter of the financial year 2025-26 (Q2FY26), up 11.7 per cent Y-o-Y

Shares of MRF Ltd. remained volatile after analysts at Motilal Oswal reiterated their 'Sell' call with 23 per cent downside for the stock as the September quarter topline came in below estimates. 

 

The domestic brokerage has a 12-month target price of ₹121,162 per share, 23 per cent downside from Friday's closing price. 

 

The tyre manufacturer reported a consolidated net profit of ₹525.64 crore in the second quarter of the financial year 2025-26 (Q2FY26), up 11.7 per cent from the ₹470.7 crore in the same quarter last year. Sequentially, profit rose 5 per cent from ₹500.47 crore. 

 

Its revenue from operations stood at ₹7,378.72 crore during the quarter, up 7.2 per cent year-on-year (Y-o-Y) from ₹6,881.09 crore in Q2FY25. On a sequential basis, however, revenue fell 3.9 per cent from ₹7,675.69 crore in the first quarter of FY26. MRF's Q2 expenses increased to ₹6,788 crore, up 6.8 per cent Y-o-Y and down 4.8 per cent sequentially.

 

MRF reported a net profit in line with estimates, according to Motilal Oswal. The Ebitda margin of 15 per cent exceeded expectations of 14.2 per cent on account of lower input costs. However, revenue fell short of projections due to temporary GST-related destocking by distributors.

 

Motilal Oswal noted that sales were seasonally softer in the quarter. In the latter part of 2QFY26, GST cuts led to a short-term impact on replacement demand, though the lower tax rate is expected to benefit the industry in the coming quarters.

 

MRF’s competitive positioning has weakened in recent years, reflected in reduced pricing power in both the Passenger Car Radial and Truck & Bus Radial segments, Motilal Oswal said in a statement. The company is expected to continue prioritising market-share recovery across categories, which is likely to cap margin expansion even as input costs soften. Overall, Motilal Oswal forecasts a 13 per cent earnings CAGR over FY25-28.  CATCH STOCK MARKET LIVE UPDATES TODAY

MRF stock price history

The tyre maker's stock rose as much as 1 per cent during the day to ₹1,58,500 per share. The stock pared gains to trade 0.32 per cent higher at ₹157,950 apiece, compared to a 0.25 per cent advance in Nifty 50 as of 9:33 AM. 

 

The counter has risen 21 per cent this year, compared to a 9.8 per cent advance in the benchmark Nifty 50. MRF has a total market capitalisation of ₹67,167.83 crore.