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MRF faces margin pressure as input costs stay elevated

MRF’s gross margin fell 570 bps sequentially in Q1FY27 to 32.7%, as natural rubber and crude derivatives costs remained firm amid Middle East supply-chain disruptions.

Reported · Written up by our desk · Previews

MRF is set to face additional margin pressure in the coming quarters of FY27 unless raw-material prices ease or it accelerates price hikes, according to LiveMint Markets. The tyre maker reported cost inflation as a key factor behind a subdued performance in its June quarter, or Q1FY27.

In Q1FY27, standalone revenue rose 10% year-on-year to ₹ 8,291.56 crore, supported by replacement and original equipment manufacturer demand as well as calibrated price increases. However, revenue still missed consensus estimates, while adjusted profit after tax fell 2% year-on-year to ₹ 474.37 crore, even as other income jumped 53% to ₹ 191.48 crore.

Ebitda declined 8% year-on-year to ₹ 948.6 crore, driven by a 570 bps sequential drop in gross margins to 32.7%. MRF said price and cost optimizations were not enough to fully offset the margin hit, with ongoing conflicts in the Middle East and related supply-chain disruptions keeping natural rubber and crude derivatives costs firm.

LiveMint Markets also cited brokerage commentary that MRF’s single-digit replacement-market price increases lag behind some listed peers. Anand Rathi Share and Stock Brokers warned of an 8% to 10% rise in MRF’s raw-material basket in Q2FY27, while noting that peers such as Ceat and Apollo Tyres saw stronger revenue growth but also sequential gross margin contraction.

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