Shares of MRF climbed over 2 percent in intraday trade on BSE on June 30, a day after the company posted over a two-fold surge in consolidated net profit to Rs 679.02 crore for the fourth quarter ended March 31.
The company had reported a net profit of Rs 293.93 crore for the same period of 2018-19 fiscal.
Revenue from operations stood at Rs 3,685.16 crore as compared with Rs 4,137.67 crore in the same period of 2018-19, MRF Ltd said in a regulatory filing.
For 2019-20 fiscal, the company posted a consolidated net profit of Rs 1,422.57 crore as against Rs 1,130.61 crore in 2018-19, it added.
Revenue from operations for last fiscal stood at Rs 16,239.36 crore as compared to Rs 16,062.46 crore in 2018-19.
The company's board recommended a final dividend of Rs 94 per share (940 percent) for the year ended March 31.
With two interim dividends of Rs 3 each paid during the year, the aggregate dividend for the last financial year is Rs 100 each per equity share of Rs 10 each (1,000 percent), MRF said.
After the March quarterly numbers, brokerage Kotak Institutional Equities maintained a 'sell' call on the stock with a target price of Rs 55,000.
"We remain concerned about the increase in competitive intensity in the two-wheeler segment. Valuations are expensive and don’t factor in risks related to a decline in profitability over the medium-term. 'Sell' stays with a revised fair value of Rs 55,000 (from Rs 62,000 earlier), valuing the stock based on 18 times June 2022E EPS estimates (from 18 times December 2021E estimates earlier)," Kotak said.
Kotak has cut the FY2021-22E EPS estimates by 22-25 percent led by a 14-17 percent cut in revenue growth assumptions and a 40-90 bps increase in EBITDA margin expansion.
The brokerage expects the company to do well due to higher dependence on the replacement segment (70 percent of the revenues), which it believes will remain resilient during the pandemic.
However, the entry of new players in the two-wheeler industry coupled with a slowdown in the automotive industry does not augur well for the company’s OEM revenues, Kotak underscored.
Shares of MRF traded 1.59 percent higher at Rs 66,230 on BSE around 12:10 hours.
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