MRF shares fall 6 per cent after Q1 earnings below expectations

MRF shares fall 6 per cent after Q1 earnings below expectations

MRF's shares fell by nearly 6 per cent after the tyre maker reported a 25 per cent fall in profit for the quarter ended June 2022. The MRF stock fell 5.81 per cent to Rs 82,615 against the previous close of Rs 87,712. 25 on the BSE.

The stock opened lower at Rs 86,551. The large cap stock was trading 4.36 per cent lower at Rs 83,885 at 2: 09 pm.

A total of 948 shares of the telco changed hands, amounting to a turnover of Rs 8 crore on the BSE. The firm's market cap fell to 35,582 crore.

The share has gained 14.79 per cent in a single year and increased 4.45 per cent since the beginning of the year.

The stock was trading at a 52 week high of Rs 89,333 on August 4, 2022 and a 52 week low of Rs 62,944 on February 24, 2022.

The company reported a consolidated profit from continuing operations at 123.6 crore in the first quarter of June, impacted by higher raw material costs. In the year-ago period, it posted a consolidated profit of Rs 165.58 crore.

Sales rose by 36.14 per cent to Rs 5,695. In Q 1 there were 93 crores against 4,183. In the corresponding quarter of the previous fiscal, 96 crore were spent.

The operating profit excluding other income fell 0.43 per cent to Rs 493.40 crore in the June 2022 quarter, against Rs 495.53 crore in the June quarter of the previous fiscal year. The March quarter of the previous fiscal saw a decrease in profit by 25.19 per cent from Rs 165.21 crore.

Sales rose 7.37 per cent from Rs 5,304. In Q 4 of the previous fiscal, there were 82 crore.

Motilal Oswal said Q 1 earnings were below its estimates and were affected by MTM losses and cost pressure.

It has assigned a neutral call to the stock with a target price of Rs 80,000, 9 per cent less than the current market price of Rs 87,712 We reduce our FY 23 EPS estimate by 5.5 per cent to account for margin pressure and upgrade out FY 24 EPS estimate by 12 per cent to account for commodity costs, in turn improving the margin. The financial services firm said that the lower other income expected due to MTM loss resulted in a 30% YoY decline in PAT to Rs 1.1 billion and we maintain our Neutral rating with a target price of Rs 80,000.

The company said its board approved raising of Rs 100 crore through the issuance of non-convertible debentures on a private placement basis.

MRF is engaged in the manufacturing and sale of tyres, tubes, flaps, tread rubber and rubber chemicals.