CHENNAI (Reuters) – Indian tyremaker MRF reported a more-than-five-fold surge in first-quarter earnings on Thursday, beating estimates, as raw material prices eased and demand for higher-priced vehicles from consumers in urban areas held steady.
Standalone profit from continuous operations jumped 417% to 5.81 billion rupees ($70.21 million) for the quarter ended June, from 1.12 billion rupees, a year earlier, according to a regulatory filing.
Analysts, on average, had expected a profit of almost 3.83 billion rupees, according to Refinitiv IBES data.
Earlier this week, MRF’s larger rival CEAT posted a nearly 16-fold jump in profit.
Tyre companies reaped the benefits of a fall in rubber prices, a key raw material for the industry, with prices having fallen by 20%-25% over the last year through May, according to HDFC Securities.
This was reflected in MRF’s cost of materials consumed, which fell 8% to 37.22 million rupees.
Total expenses, however, grew 2.5% from a year ago thanks to higher sales.
High-income consumers have largely shrugged off the impact of high inflation to splurge on popular utility vehicles and premium motorcycles, while easing supply-chain bottlenecks also helped gradually ramp up production.
Indian automakers recorded an increase in passenger vehicle (PV) demand in recent months, aided by demand for new models, while premium two-wheeler makers reported sales growth on steady urban demand.
Consequently, revenue from operations rose 13% to 63.23 billion rupees.
Rival JK Tyre reports results later this week.
Shares of MRF, which reappointed K. M. Mammen as its managing director for five years effective February 2024, rose over 2% post-results to hit a record high, extending gains to 18% this year.
The company, which began as a toy balloon manufacturer a year before India’s independence, makes a slew of products, including racing car tyres, paints and toys.
($1 = 82.7575 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai; Editing by Janane Venkatraman)
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