Increase in input cost, despite higher revenue, was the reason for MRF's FY25's profit decline. Replacement, institutional and export segments saw strong growth in Q4 and FY25. Exports grew 23% to Rs 23.21 billion. Growth was supported by new SKUs in various segments. Raw material cost softened slightly in Q4 but was offset by rupee depreciation. Price hikes were aimed at partially offsetting the rising input costs throughout the year.
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Anand Rathi Report
Exceeding our estimate, MRF Ltd.'s Q4 Ebitda grew 18% y/y to Rs 10.4 billion due to the higher-than-expected gross margin. The outlook for original equipment manufacturer/replacements/exports is bright and the company would gain share.
Ahead, we expect gross margin improvement, led by lower international rubber prices/crude derivatives and better realization (product mix and selective price hikes).
We expect 10%/16%/24% revenue/Ebitda/PAT growth over FY25-27. We remain positive regarding margin expansion and market-share gains. The stock quotes at 25x/21x FY26e/27e EPS.
We maintain a Buy, at a slightly higher target price of Rs 1,65,000 (earlier Rs 1,60,000), 25x FY27e P/E (25x FY27e).
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