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MRF Ltd Q1FY22 Result Analysis

MRF Ltd Q1FY22 Result Analysis

Published on 11 August 2021 Views 22 Comments 0

Standalone Q1FY22 results

  • The standalone revenue for Q1FY22 stood at Rs. 4,128 crores, a growth of 70% YoY. The revenue declined by (-12.9%) on QoQ basis.
  • Operating profit stood at Rs. 580 crores. The operating profit increased by 54.7% YoY and suffered a decline of (-27.7%).
  • The operating margins in Q1FY22 were 14%, a decline of (-100) bps when compared to operating profit margin of 15% during Q1FY21. The operating margins were down by (-300) bps on QoQ basis.
  • Profit before tax stood at Rs. 217 crores, posting a growth of almost 6.7x due to lower base effect. The same PBT declined by (-49.7) QoQ.
  • The company registered a PAT of Rs. 161 crores. The PAT suffered a decline of (-49.2%) when compared to Q4FY21 PAT of Rs. 317 crores. PAT has shown a huge percentage increase when compared on YoY basis mostly due to a very low base during Q1FY21.

Consolidated Q1FY22 results

  • The consolidated revenue for Q1FY22 stood at Rs. 4,184 crores, a growth of 70% YoY. The revenue declined by (-13.1%) on QoQ basis.
  • Operating profit stood at Rs. 588 crores. The operating profit increased by 56.4% YoY and suffered a decline of (-28.6%).
  • The operating margins in Q1FY22 were 14%, a decline of (-100) bps when compared to operating profit margin of 15% during Q1FY21. The operating margins were down by (-300) bps on QoQ basis. The company restricted its decline of margins when compared with its peers with sharp change in finished goods inventory.
  • Profit before tax stood at Rs. 222 crores, increasing nearly 7 times when compared to PBT of Q1FY21 and a declining by (-50.6%) on QoQ basis.
  • The company registered a PAT of Rs. 166 crores. The PAT suffered a decline of (-50%) when compared to Q4FY21 PAT of Rs. 332 crores. PAT has shown a huge percentage increase when compared on YoY basis mostly due to a very low base during Q1FY21.
  • Low interest cost and higher other income has restricted the decline of PAT to 50%.

Business Highlights

  • The Q1FY22 performance of the company was majorly impacted due to rise in RM prices and operating deleverage.
  • The pricing environment of the industry is stable as all the players have been taking price increases to offset the rise in raw material costs.

  • RM cost as percentage of sales is highest at 62.1% in previous 5 quarters.
  • This has resulted in lowest gross margins operating margins for Q1FY22 when compared to past 5 quarters.
  • The gross margin trend is stable for the company when compared to its peers.
  • The company with its strong brand enjoys market share leadership in 2W, TBB and Agriculture tyres segments. This gives MRF pricing power resulting into high profitability and superior ratios.
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