MRF Q3 Results Review: Motilal Oswal Reiterates 'Sell' On The Stock — Here's Why

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Motilal Oswal Report

MRF Ltd.’s competitive positioning in the sector has weakened over the past few years, which is reflected in the dilution of pricing power in the passenger car radial and truck-bus radial segments. This, coupled with the impact of the planned capex, should limit the expansion in its return ratios.

We expect MRF’s return ratios to dilute over the next two years as its return on equity is expected to reach 10.5% by FY27E (versus ~13.5% in FY24).

Valuations at 25.2x/22x FY26E/FY27E EPS appear expensive given its weakening competitive position and similar capital efficiency as peers. Hence, we reiterate our Sell rating on the stock with a target price of Rs 95,500 (valuing it at 19 times Dec’26E earnings per share).

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