Leading tyre maker MRF has reported a significant increase in its standalone net profit at ₹581 crore for the quarter ended June 30, 2023, when compared with a net profit of ₹112 crore in a year-ago period, helped by price increases and growth in sales.

Its profit before exceptional items and tax stood at ₹778 crore as against ₹217 crore in June 2022 quarter. Its operating margin (EBIT margin) zoomed 12.38 per cent from 3.24 per cent in June 2022 quarter and 8.99 per cent in March 2023 quarter.

Revenue from operations grew 13 per cent to ₹6,323 crore during June 2023 quarter when compared with ₹5,599 crore in the year-ago period, supported by improved demand.

While the cost of raw materials consumed fell to ₹3,722 crore when compared with ₹4,043 crore, the company’s total expenses were slightly higher at ₹5,619 crore as against ₹5,481 crore in June 2022 quarter. 

On a consolidated basis, the company’s profit after tax stood at ₹589 crore as against ₹124 crore in June 2022 quarter, while revenue from operations grew to ₹6,440 crore as against ₹5,696 crore. 

The company’s net worth grew to ₹15,317 crore as of June 30, 2023, from ₹14,151 crore a year ago.

Reappointment of K M Mammen

Meanwhile, the company’s Board on Thursday approved the reappointment of K M Mammen as Managing Director of the Company (with the designation “Chairman & Managing Director) for 5 years with effect from February 8, 2024.

With the company reporting impressive results for the Q1, shares of MRF hit a new high and closed at ₹1,06,923.90, gaining 4.17 per cent on BSE on Thursday.

Rating agency Icra has projected 6-8 per cent growth in domestic tyre demand in FY24, supported by favourable demand from the OEM segment and expected revival in the replacement segment. Tyre export volumes contracted by 7 per cent in FY23 owing to reduced demand from key markets on the back of economic slowdown and inflationary pressure. “The export demand to remain subdued for the next couple of quarters,” it said.

“The operating and net margins of the industry stood at about 11 per cent and about 4 per cent respectively, in FY23. The margins, which were affected by the rise in input prices and freight costs in FY22 and H1 FY23, witnessed a sharp recovery in H2 with softening of prices of natural rubber and crude oil derivatives since July 2022. Thus, the margins are to expand by 200-300 bps in FY24,” said Nithya Debbadi, Assistant Vice President and Sector Head – Corporate Ratings, ICRA.