India's MRF reports five-fold jump in Q1 profit on cooling rubber prices, higher demand

JK Tyre & Industries

03/08/2023 08:53

CHENNAI, Aug 3 (Reuters) - Indian tyremaker MRF  MRF.NS 
reported a more-than-five-fold surge in first-quarter earnings
on Thursday, beating estimates, as raw material prices eased and
demand for higher-priced vehicles from consumers in urban areas
held steady.
    Standalone profit from continuous operations jumped 417% to
5.81 billion rupees ($70.21 million) for the quarter ended June,
from 1.12 billion rupees, a year earlier, according to a
regulatory filing.
    Analysts, on average, had expected a profit of almost 3.83
billion rupees, according to Refinitiv IBES data.
    Earlier this week, MRF's larger rival CEAT  CEAT.NS  posted
a nearly 16-fold jump in profit. 
    Tyre companies reaped the benefits of a fall in rubber
prices, a key raw material for the industry, with prices having
fallen by 20%-25% over the last year through May, according to
HDFC Securities.
    This was reflected in MRF's cost of materials consumed,
which fell 8% to 37.22 million rupees.
    Total expenses, however, grew 2.5% from a year ago thanks to
higher sales.
    High-income consumers have largely shrugged off the impact
of high inflation to splurge on popular utility vehicles and
premium motorcycles, while easing supply-chain bottlenecks also
helped gradually ramp up production.
    Indian automakers recorded an increase in passenger vehicle
(PV) demand in recent months, aided by demand for new models,
while premium two-wheeler makers reported sales growth on steady
urban demand. 
    Consequently, revenue from operations rose 13% to 63.23
billion rupees.
    Rival JK Tyre  JKIN.NS  reports results later this week. 
    Shares of MRF, which reappointed K. M. Mammen as its
managing director for five years effective February 2024, rose
over 2% post-results to hit a record high, extending gains to
18% this year.
    The company, which began as a toy balloon manufacturer a
year before India's independence, makes a slew of products,
including racing car tyres, paints and toys.

($1 = 82.7575 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai; Editing by Janane
Venkatraman)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))