Anand Rathi's research report on MRF
Broadly in line with our Rs9.7bn estimate, MRF’s Q2 EBITDA fell 14% y/y to Rs9.7bn. The outlook for OEM/replacements/exports is bright and MRF would gain share. Ahead, we expect better margins as raw material costs are expected to rise only slightly in Q3, alleviated by price hikes. Fresh crops coming in Q4 would increase natural rubber supply and lower costs; also ocean freight rates and crude prices are easing. We introduce FY27e with 9%/11%/15% revenue/EBITDA/PAT growth. We turn positive on margin expansion, market-share gains and stockprice drops.
Outlook
The stock is reasonably valued and quotes at 21x/19x FY26e/27e EPS. We upgrade it to a Buy, at a higher TP of Rs160,000, 25x FY27e P/E (earlier Rs142,000, 25x FY26e).
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