MRF Q2 Results: Shares drop after margin falls to multi-quarter low

Shares of Chennai-based tyre manufacturer MRF Ltd. declined as much as 6 percent on Wednesday after the company's EBITDA margin for the September quarter fell to a multi-quarter low.

The company's margin for the quarter stood at 8.2 percent for the quarter, down 240 basis points from the same period last year. At the start of Financial Year 2022, margin stood at 11.8 percent.

MRF's margin drop can be attributed to an increase in costs. Raw material costs have increased 2-3 percent compared to the June quarter. Overall expenses also increased 21 percent from last year while finance costs jumped 29 percent.

The company reported a 19 percent increase in overall sales for the September quarter.

Revenue for the quarter came in at Rs 5,826.3 crore compared to Rs 4,907.8 crore during the same period last year.

Operating profit or EBITDA declined 8 percent from last year to Rs 480.6 crore.

Net Profit for the period declined 24 percent to Rs 145.4 crore on a consolidated basis.

The board has also approved a dividend of Rs 3 per share, record date for which has been set as November 18.

Aside of financials, the company's board has also approved enhancement in the issue of Non-Convertible Debentures through private placement from Rs 100 crore earlier to Rs 150 crore.

Shares of MRF are currently trading 6.2 percent lower at Rs 89,040.