Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

BUY MRF - Outstripping yet again: Anand Rathi Institutional Research

Posted On: 2016-08-16 20:44:28

MRF - Outstripping yet again; retaining our Buy with a target price of Rs 43500.

MRF's Q1 FY17 revenue was flattish yoy because of competition (Chinese tyres) and lower realisations. Yet, its greater operating efficiency resulted in its highest-ever margin of 24.1%. We expect some shrinking in margins due to higher rubber prices. But, we believe the industry might very comfortably pass on the impact of rising rubber prices in coming quarters and protect its margins.

Q1 FY17 result analysis. At Rs. 34.8bn, revenue was flat yoy. This, we believe, was due to greater volumes and lower realisations. Lower rubber prices (than a year ago) aided the 140-bp gross-margin expansion. However, as staff and other expenses increased, EBITDA margin expanded only 40bps to 24.1% (the highest since FY09). PAT came at Rs. 4.9bn, up only 2% yoy.

Advantage market leader. Dominant in all segments as well as a leader in the replacement market, MRF is the only company commanding a premium in all categories. Despite stiff competition from Chinese imports, we expect it to race ahead of the industry due to its higher OE growth and its leading position in the replacement market. We expect 9% volume growth during FY16-18.

Higher rubber price vs. greater operating efficiency. With its greater efficiency, we expect MRF to protect its margins despite pressure on input costs, especially of rubber. Demand (especially rural) because of the good monsoon would enable higher bias capacity utilisation, which in turn would provide a cushion to margins in the context of rising rubber prices. Also, we believe that it would be able to pass on any increase in rubber prices owing to its leading position.

Valuation. We retain our estimates, and maintain a Buy. We value it at 10x FY18e and arrive at a price target of Rs. 43,500, implying 19% potential. Risks. Rising rubber prices.

Shares of MRF LTD. was last trading in BSE at Rs.36105 as compared to the previous close of Rs. 36116.45. The total number of shares traded during the day was 524 in over 385 trades.

The stock hit an intraday high of Rs. 36483.35 and intraday low of 35969.4. The net turnover during the day was Rs. 18976595.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Company Update: Venky's India Ltd - ACCUMULATE - TP Rs.4600 - Kotak
Company Update: NBCC (India) Ltd - BUY - TP Rs.229 - Kotak
Company Update: Petronet LNG Ltd - BUY - TP Rs.276 - Kotak
India Inc. has INR 1.8 lakh crore of cash trapped in their balance sheets: EY Report
Company Update: KNR Constructions Ltd - BUY - TP Rs.348 - Kotak
Akzo Nobel India Ltd - Initiating Coverage - Kotak Securities
Greenply Industries - Initiating Coverage - Angel Broking
Growth of India's apparel exports contingent upon overcoming internal and external headwinds: ICRA
Management Meet Update: Kansai Nerolac Paints Ltd - BUY - TP Rs.600 - Kotak
Ajanta Pharma - Initiating Coverage - Arihant Capital Markets
Result Update: Indo Count Industries Ltd - BUY - TP Rs.135 - Kotak
Arihant Capital Markets - Ambuja Cement 4QCY17 Result Update - HOLD
Result Update: Bodal Chemicals Ltd - ACCUMULATE - TP Rs.164 - Kotak
Result Update: Mahindra & Mahindra - BUY - TP Rs.864 - Kotak
Result Update: The India Cements Ltd - BUY - TP Rs.195 - Kotak
Result Update: Sun TV Network Ltd - REDUCE - TP Rs.994 - Kotak
Result Update: Voltas Ltd - ACCUMULATE - TP Rs.648 - Kotak
Result Update: Oil India Ltd - ACCUMULATE - TP Rs.392 - Kotak
Result Update: Petronet LNG Ltd - BUY - TP Rs.285 - Kotak
Result Update: Carborundum Universal Ltd - BUY - TP Rs.418 - Kotak
Proposed opening of coal sector to private players: Angel Broking
Result Update: Vascon Engineers Ltd (VEL) - BUY - TP Rs.57 - Kotak
Initiating Coverage: HSIL Ltd - Angel Broking
Result Update: The Phoenix Mills Ltd - BUY - TP Rs.672 - Kotak
Result Update: Time Technoplast Ltd - BUY - TP Rs.214 - Kotak
Result Update: Shipping Corporation of India - BUY - TP Rs.110 - Kotak
Result Update: PNC Infratech Ltd - BUY - TP Rs.208 - Kotak
Result Update: KNR Constructions Ltd - ACCUMULATE - TP Rs.348 - Kotak
Result Update: NBCC (India) Ltd - ACCUMULATE - TP Rs.229 - Kotak
Result Update: Jindal Stainless Hisar Ltd - BUY - TP Rs.318 - Kotak
Result Update: NMDC Ltd - SELL - TP Rs.130 - Kotak
Result Update: Talbros Automotive Ltd - BUY - TP Rs.389 - Kotak
Result Update: Sterling Tools Ltd - ACCUMULATE - TP Rs.428 - Kotak
Result Update: FIEM Industries Ltd - BUY - TP Rs.1203 - Kotak
Management Meet Update: Escorts Ltd - BUY - TP Rs.1051 - Kotak
Result Update: GE Shipping Company - BUY - TP Rs.500 - Kotak
Result Update: Marico Ltd - ACCUMULATE - TP Rs.327 - Kotak
Result Update: Mahanagar Gas Ltd - ACCUMULATE - TP Rs.1084 - Kotak
Result Update: Wonderla Holidays Ltd - BUY - TP Rs.457 - Kotak
Result Update: Asian Granito India Ltd - BUY - TP Rs.705 - Kotak
Result Update: NALCO - BUY - TP Rs.100 - Kotak
Result Update: VA Tech Wabag Ltd - BUY - TP Rs.672 - Kotak
Result Update: Greaves Cotton Ltd - REDUCE - TP Rs.136 - Kotak
PNB's 11300 cr fraud will impact the asset quality: Angel Broking
Lambodhara Textiles Ltd Q3 net profit climbs to Rs. 3.46 crores
Result Update: GHCL Ltd - BUY - TP Rs.365 - Kotak
CHHOTA (to) Mota Ideas - Result Update: Eveready Industries India Ltd - BUY - TP Rs.530 - Kotak
Result Update: Tata Motors - BUY - TP Rs.477 - Kotak
Result Update: Bajaj Auto Ltd - BUY - TP Rs.3670 - Kotak
Views on Indoco Remedies Ltd 3QFY2018: Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2018