Global brokerage firm Citi has maintained its bullish outlook on MRF even as the company's September-quarter performance was hit by rising raw material prices. The brokerage has retained its 'Outperform' rating on the stock with a target price of ₹1,65,238, indicating an upside potential of 30% from the stock's Wednesday closing price of ₹1,27,125.
Earlier this week, the tyre manufacturer reported an 18% year-on-year (YoY) increase in revenue to ₹85.2 billion. However, higher-than-expected raw material inflation led to a 430-basis-point (bp) YoY contraction in its EBITDA margin to 10.7%. The margin pressure also resulted in a 28% YoY decline in profit after tax (PAT) to ₹3.7 billion.
The brokerage said the margin pressure would have been even higher if the company had not undertaken price increases of 13-15% in the replacement segment during the first half of FY27. It also noted that cost-reduction initiatives had helped partially cushion the impact of higher input prices, CNBC-TV18 reported. Mint could not independently verify the report.
Citi pointed out that the benefit of price increases in the original equipment manufacturer (OEM) segment typically…