MRF Q2 Results Review - Ebitda Inline Despite A Miss On Revenue: Motilal Oswal

Motilal Oswal Report

MRF Ltd.’s Q2 FY24 performance was a mixed bag as revenue was below estimate at Rs 60.9 billion (+6% YoY; estimate Rs 64.1 billion), while Ebitda was in line at Rs 11.3 billion (+2.4 times YoY).

However, lower raw material costs led to an Ebitda margin beat. MRF's margin stood at 18.5% (versus estimate 17.5%).

We believe the Q2 margin reflects most of the tailwinds and should see some moderation in the coming quarters.

We tweak our FY24E/FY25E EPS by +3%/4% to factor in raw material cost benefits partially offset by weaker revenue growth across categories.

Reiterate 'Sell' with a target price of Rs 97,000 (based on 18 times Sep’25E EPS), as the stock trades at 20.5 times FY25E EPS (in line with its 10-year LPA), which does not reflect its weakening competitive position and similar return ratios versus its peers.

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