MRF Q1 Review - Operating De-Leverage Impacts Performance: Motilal Oswal
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Motilal Oswal Report
MRF Ltd.’s Q1 FY22 operating performance was impacted by operating deleverage and raw material cost inflation.
The industry is taking gradual price increases to dilute the impact of severe cost inflation.
Revenue/Ebitda/profit after tax declined 13%/35%/49% QoQ to Rs 41.3 billion/Rs 4.9 billion/Rs 1.6 billion.
Q1 FY22 revenue was down 13% QoQ (up 70% YoY) to Rs 41.3 billion.
The decline was largely in line with peers [Ceat Ltd.: 17% QoQ and Apollo Tyres Ltd. (standalone): 11% QoQ].
The decline in gross margin was restricted to 60 basis points QoQ (205 bps YoY) at 37.9%.
The decline of just 60 bps QoQ is largely on account of a sharp change in finished goods inventory.
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