January Rubber Price Surge Weighs On MRF’s Margins In Fourth Quarter

Shares of tyre manufacturer MRF Ltd. fell as much as 3.2 percent after it reported a decline in profit for the March-ended quarter due to rising raw material costs.

Net profit in the fourth quarter fell 32 percent to Rs 286.7 crore as compared to a year ago, according to a stock exchange filing. Revenue declined 1.57 percent to Rs 3,712.8 crore. Profit from operations fell 26 percent, while operating margin contracted 430 basis points to 15.8 percent.

Raw material costs in the fourth quarter went up 22.6 percent to Rs 2,120 crore versus the same period last year. Rubber prices in Thailand, which accounts for almost half of the world's natural rubber, had flared up to a five-year high in the last few days of January after a flood impacted production. Prices of ribbed smoked sheet (RSS) Grade-4 rubber, which is mostly used for tyre manufacturing has been on the decline since then.

Another Indian tyre company Ceat Ltd. too had taken a hit on its operational performance in the fourth quarter due to higher raw material costs.

The board has recommended paying a dividend of Rs 54 per share. The stock closed 2.5 percent lower, as compared to the benchmark BSE Sensex which closed 0.7 percent up.