Indian tire manufacturer MRF Ltd has reported a significant surge in its Q2 net profit, which soared fivefold to Rs. 572 crore ($76.5 million), up from last year's Rs. 124 crore ($16.6 million). This substantial increase is largely attributed to a notable reduction in raw material expenditure by 10%, leading to an impressive EBITDA margin expansion from 8.2% to 18.5%.
The company's revenue also saw an uptick, rising by 6.5% to reach Rs. 6,088 crore ($814.6 million), despite witnessing a sequential drop from Q1's Rs 6,323.3 crore ($846 million). This reflects an industry-wide trend influenced by reduced raw material costs and product premiumisation.
The quarter also saw an increase in operating margins, which rose to 12.8%, up from Q1's 12.4%. Concurrently, MRF's net profit margin increased significantly to nearly 9.3%, a sizable jump from just over 2% in the same quarter of the previous year.
In line with these robust financial results, MRF announced an interim dividend of Rs. 3 per share, due on November 17. However, despite the strong financial performance and dividend declaration, MRF shares traded lower by 2.5% on Friday. It remains to be seen how the market will react in the coming weeks to the company's latest financial report and dividend announcement.
InvestingPro Insights
In light of the recent financial report and dividend announcement by MRF Ltd, InvestingPro offers some relevant metrics and tips to aid in understanding the company's current position.
According to InvestingPro data, the previous close price for MRF was 1.47 USD.
InvestingPro Tip one: MRF's strong earnings should allow management to continue dividend payments. This aligns with the company's recent announcement of an interim dividend, demonstrating its financial health.
InvestingPro Tip two: MRF is trading at a low P/E ratio relative to near-term earnings growth. This suggests that the company's stock may be undervalued, offering potential opportunities for investors.
InvestingPro Tip three: MRF has maintained dividend payments for 23 consecutive years, underscoring its commitment to shareholder value.
For more insights and tips, consider exploring the InvestingPro platform which hosts numerous additional tips to inform your investment decisions.
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