India's MRF beats Q1 profit view on higher volumes

BENGALURU (Reuters) - Indian tyre maker MRF reported first-quarter profit above analysts' estimates on Thursday, as stronger volume growth outweighed a rise in rubber prices.

Profit fell 3.1% to 5.63 billion rupees ($67.1 million) in the April-June period, but was above analysts' expectation of 4.25 billion rupees, according to LSEG data.

Revenue rose about 12% to 70.78 billion rupees.

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KEY CONTEXT

Prices of rubber, a key raw material for tyre makers, rose more than 10% in the April-June quarter, according to analysts.

A healthy demand in the tyre replacement market ahead of the monsoon season was expected to soften the blow of higher rubber prices for tyremakers, analysts said.

Rival CEAT also beat first-quarter profit estimates, helped by price hikes coupled with healthy demand in the replacement market.

PEER COMPARISON

Valuation (next Estimates (next 12 months) Analysts' sentiment

12 months)

RIC PE EV/EBITDA Revenue growth Profit growth Mean rating* # of analysts Stock to price target** Div yield (%)

MRF Ltd 26.70 13.50 8.19 4.37 Sell 4 1.24 0.15

CEAT Ltd 15.40 7.19 9.93 4.31 Buy 14 0.89 1.15

Apollo Tyres Ltd 15.89 7.73 7.40 12.19 Buy 23 0.96 1.16

JK Tyre & Industries Ltd 10.58 6.40 7.05 18.37 Buy 5 0.74 1.12

APRIL-JUNE STOCK PERFORMANCE

(Figures in percentage)

($1 = 83.9270 Indian rupees)

(Reporting by Sethuraman NR in Bengaluru; Editing by Subhranshu Sahu and Eileen Soreng)