CLSA sees declining crude prices boosting MRF's margins

MRF

08/05/2025 06:40

** Shares of tyre maker MRF MRF.NS climb 0.5% to 141,110 rupees

** CLSA raises PT on India's priciest stock to 168,426 rupees from 128,599 rupees; retains "outperform" rating

** CLSA's new PT is the highest among brokerages tracking the stock, compared to the previous Street high of 160,000 rupees by Anand Rathi

** Brokerage says it expects MRF's margins to improve significantly on lower crude oil-based raw material costs and easing Indian rubber prices

** Brent crude futures LCOc1 have dropped 18% so far this year

** CLSA estimates EBITDA margin will improve to 17.3%-17.8% by FY27 from 14.3% in FY25

** Adds, MRF's better portfolio has helped it outperform peers and should also help it generate free cash flow of 27 billion rupees ($318.7 million) in FY27

** Avg rating on the stock is a "hold", compared to "buy" for CEAT CEAT.NS, Apollo Tyres APLO.NS and JK Tyre JKIN.NS - data compiled by LSEG

** MRF stock's 7.8% YTD climb this year trails only CEAT's 16% rise

($1 = 84.7200 Indian rupees)

(Reporting by Nandan Mandayam in Bengaluru)

((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))