Now Reading: MRF profit dips 2% as input costs and competition mount
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MRF profit dips 2% as input costs and competition mount
MRF reported a 2% decline in adjusted profit after tax to Rs 474.37 crore for the quarter ended June 2025, missing consensus estimates. Revenue growth was sluggish, with EBITDA falling 8% year-on-year…
MRF reported a 2% decline in adjusted profit after tax to Rs 474.37 crore for the quarter ended June 2025, missing consensus estimates. Revenue growth was sluggish, with EBITDA falling 8% year-on-year to Rs 948.6 crore as gross margins contracted 570 basis points sequentially to 32.7% due to rising input costs from natural rubber and crude derivatives.
Management cited ongoing Middle East conflicts and supply-chain disruptions for keeping raw material prices firm, warning that margin pressure would continue. Brokerages noted MRF's single-digit price hikes in the replacement market lag behind peers like Ceat and Apollo Tyres, which saw 18% and 16% revenue growth respectively.
Competition is intensifying from railways along the Western Dedicated Freight Corridor, threatening replacement demand for medium and heavy commercial vehicles. New player Balkrishna Industries could also trigger pricing wars. MRF stock has fallen about 13% in 2026 and trades at 20 times estimated FY28 earnings.
analysts from Anand Rathi and Centrum Broking flagged an 8-10% rise in raw material costs expected in the second quarter, with margin recovery dependent on MRF's ability to hike prices amid competitive pressures.
Indian Opinion Analysis
The tyre industry's margin sensitivity to input costs is structural, not cyclical, as natural rubber prices are driven by global supply shocks that no single Indian player controls. MRF's premium brand position historically allowed it to pass on costs, but its reluctance to raise prices aggressively suggests fear of losing market share in a price-sensitive replacement market. The real test will come in Q2FY27 when raw material costs are expected to spike 8-10%. Watch MRF's market share data and its next price hike announcement as signals of whether it can defend margins without ceding ground to Apollo, Ceat, or Balkrishna.
Source: livemint.com
This story was synthesised by AI from the source linked above.
