MRF - Result Review - Angel Broking

For 3QSY2013, MRF reported a good set of numbers. Top-line grew by 1.4% yoy to Rs.3,051cr. However, EBITDA margins expanded by 506bp yoy to 15.8% due to fall in rubber prices to a two year low during the quarter. This led the net profit to surge by 57.2% in 3QSY2013 to Rs.227cr from Rs.145cr in 3QSY2012. Slowdown in auto demand has led the tyre companies to cut prices, which will impact the MRF's top-line in the short term. However, lower international rubber prices are likely to help in maintaining margins. Hence, we expect MRF's bottom-line to post a 15.5% CAGR over SY2012-14E to Rs.764cr in SY2014E.

At the current market price, the stock is trading at a PE of 7.7x for SY2014E and P/B of 1.3x for SY2014E. We recommend Buy rating on the stock with a target price of Rs.16,218, based on a target P/E of 9.0x for SY2014E.

Source : Equity Bulls

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