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Motilal Oswal Report
MRF Ltd.'s management remains cautious about the demand outlook given the risk of a subnormal monsoon. Further, rising raw material costs and supply chain disruptions due to the ongoing Middle East conflict remain key near-term headwinds.
As a result, Motilal Oswal expects MRF to post just 1% earnings CAGR over FY26-28E. While its RoCE has improved to 11.8% from a recent dip to 10% in FY25, it is likely to decline back to 10% by FY27E.
Given its sub-par returns, valuations at 24.4x/ 21.7x FY27E/FY28E appear expensive.
The brokerage maintain Sell with a target price of Rs 113,936, valued at 19x FY28E earnings per share.
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