MRF shares drop: Take U-turn after reporting 20% fall in net profits for Q2

After opening in the green territory and gaining 0.40 per cent on Wednesday morning, the shares of tyre manufacturing giant MRF dropped 2.85 per cent at Rs 1,17,500 per share on the BSE. This came after the company reported a sharp fall in its net profit for the second quarter of financial year 2024-25 (Q2FY25). 

 

MRF reported a 20.4 per cent year-on-year decline in net profit for the September quarter, posting Rs 455 crore, compared to Rs 572 crore in the same period last year. However, the profit figure was slightly above the average analyst estimate of Rs 434 crore.

 

The company’s revenue for the quarter stood at Rs 6,760 crore, reflecting an 11.1 per cent increase from Rs 6,087.6 crore in the previous year. 

 

MRF’s earnings before interest, tax, depreciation, and amortisation (Ebitda) fell by 14 per cent year-on-year to Rs 973.6 crore, while Ebitda margins contracted by over 400 basis points to 14.4 per cent, down from 18.5 per cent in the same quarter last year. 

 

The company has also announced an interim dividend of Rs 3 per share, with November 19, 2024, set as the record date for the dividend. Shareholders will receive the dividend on or after November 29, 2024.

 

MRF is India's largest tyre manufacturer and ranks among the top 20 global tyre manufacturers. The company is also the largest Original Equipment Manufacturer (OEM) tyre supplier in India, offering an extensive range of tyres, from two-wheelers to fighter aircraft. 

 

MRF operates multiple manufacturing facilities located in Trichy, Tiruvottiyur, and Arakonam in Tamil Nadu, Kottayam in Kerala, Ponda in Goa, Medak in Andhra Pradesh, and the Union Territory of Pondicherry.

MRF share price history

The company’s stock has underperformed the market year to date as it has fallen 8.7 per cent, while gaining only 9 per cent in the last one year. In comparison BSE Sensex has risen 9.8 per cent year to date and 22.2 per cent in a year. 

 

The company has a total market capitalisation of Rs 49,833.43 crore. MRF’s shares are trading at a price to earnings multiple of 25.37 times and at an earning per share of Rs 4,767.70. 

At 1:01 PM; the stock of the company was down 2.33 per cent at Rs 1,18,145.10 per share. By comparison, the BSE Sensex was down by 0.16 per cent at 79,411.22.