Lower raw material cost rolls the tyres of MRF stocks

Shares of top tyre maker MRF Ltd. surged more than 3 percent after the south-based company reported a stellar set of first quarter numbers thanks to lower raw material costs.

Tyre makers use synthetic rubber as their input, prices of which has fallen more than 50 percent in the last one year on the back of a slide in global commodities.

As a consequence, MRF reported its quarterly Profit After Tax surged 94 percent to 447 crore rupees from 230.2 crores in the same quarter a year ago. Sales during April-June rose a modest 6 percent to 3,539 crore rupees compared with 3,337 crore rupees in the year ago period.

MRF's first quarter EBIDTA margins jumped to 23 percent from 14.7 percent in the year ago quarter.

Its shares were up 1,365 rupees, or 3.5 percent, to 39,900 rupees on the National Stock Exchange, where more than 34,400 shares changed hands compared with the 5-day average of 12,700 shares.

MRF's market capitalisation has surged 61 percent to 16,200 crore rupees in the last one year as investors latched on to companies where costs fell as a result of a drop in commodity prices.

(Image credits: indiatransportportal)