MRF Q4 net up 20.41%, warns of pressure from higher input cost

Tyre maker MRF Ltd posted a 20.41 per cent raise in fourth-quarter net profit. However, the firm warned that escalation in the cost of crude inputs remains a concern and would put pressure on profits going forward.

The Chennai-based company posted net profit of ₹ 345.32 crore, when compared to ₹ 286.77 crore in the same period last year.

Total income during the quarter stood at ₹ 3,944.75 crore, compared to ₹ 3,778.23 crore in the same period last year.

“In the last fiscal, the introduction of the landmark Goods and Services Tax (GST) brought in some uncertainties as businesses adjusted to the new tax regime. However a good monsoon resulted in a healthy upswing in the agrarian economy and stoked a recovery in rural demand,” the company said in a statement.

Heavy spending on infrastructure by the government helped support long-term growth, it added.

MRF also noted that the Indian Automotive sector clocked significant growth in the 2018 fiscal, buoyed by healthy volume growth across segments. The Commercial Vehicle category witnessed robust growth, especially during the second half of the last financial year, which augurs well for the tyre industry, it said.

However, it said escalation in the cost of crude based inputs remains a concern and will add pressure to the bottom-line. “At the same time the competitive intensity in the industry continues to remain at fever-pitch due to anticipated ‘on-streaming’ of several Greenfield and Brownfield capacities by many players in the months ahead.”

The firm’s warning pulled down the share of tyre companies. Shares of MRF closed down over 3 per cent at ₹ 77,045.75 on BSE. Ceat shares ended down nearly 3 per cent at ₹ 1,553.90, while Apollo Tyres closed down 1.22 per cent at ₹ 286.55. JK Tyre fell 1.87 per cent at ₹ 152.50.