India’s largest tyre manufacturer MRF Limited (MRF) reported lower-than-expected numbers in Q1FY19. Standalone revenue for the company was up 8% yoy (flat qoq) at Rs3,856cr, lower than the consensus estimate of Rs4,069cr. EBITDA was 117% yoy higher (13% qoq lower) at Rs595cr. EBITDA margin expanded 773bps yoy but contracted 231bps qoq to 15.4%. EBITDA and EBITDA margin missed the consensus estimate of Rs730cr and 17.9%, respectively. Standalone PAT was up 145% yoy (25% down qoq) at Rs261cr, but missed the consensus estimate of Rs368cr by a wide margin.
Revenue growth number was expected to be higher at about 15% yoy given the strong double-digit growth witnessed in the automobile segment in India in Q1FY19 and 1-3% price hike taken by the company.
The sequential rise in raw material cost was due to the inflation in crude price, which has an indirect bearing on input costs. However, the company managed to partially offset the same through price hikes.
Given its leadership position in the overall tyre market in India, MRF is often the price maker among peers. Strong underlying demand also makes input cost pass-through easier.
MRF Ltd is currently trading at Rs75,842.95, down Rs982.4, or 1.28%, from its previous close of Rs76,825.35 on the BSE.
The scrip opened at Rs77,000 and has touched a high and low of Rs77,391.30 and Rs75,379.50, respectively. A total of 29,829 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.
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