(Reuters) -Indian tyre maker MRF reported a 12.3% rise in second-quarter profit on Friday, helped by demand for its tyres by original equipment manufacturers.
The company’s net profit rose to 5.12 billion rupees ($58.25 million) for the quarter ended September 30, compared with 4.55 billion rupees last year.
Revenue from operations rose 7.2% to 72.5 billion rupees, while total expenses increased 6.6%.
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KEY CONTEXT
Tyre makers such as MRF, which supply to automakers such as Hyundai Motor India and Bajaj Auto, depend heavily on new vehicle sales for a major share of their revenue.
Car sales by dealers in the country in the reported quarter rose 1.8% year-over-year, helped by consumption tax cuts and festive demand.
Analysts said that replacement – change old or worn-out tyres with new ones – sales remained weak as dealers postponed purchases due to tax-related delays.
India announced tax cuts on hundreds of consumer items in September, ranging from soaps to small cars, to spur domestic demand.
Peers CEAT and JK Tyre both reported a rise in second-quarter profits in October, helped by higher demand.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBI Revenue profit Mean # of Stock to Div
TDA growth (%) growth rating analysts price target yield
(%) * ** (%)
MRF Ltd MRF.NS 27.45 13.15 7.46 17.28 HOLD 5 1.17 0.15
CEAT Ltd CEAT.NS 20.23 8.96 13.44 30.62 BUY 17 0.99 0.73
JK Tyre & Industries Ltd JKIN.NS 13.50 7.84 8.02 27.97 HOLD 5 0.95 0.66
Apollo Tyres Ltd APLO.NS 17.49 8.30 6.99 25.33 BUY 22 1.02 0.96
* The mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.8950 Indian rupees
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Rashmi Aich)
