01 — At a Glance
The Tyre King Who’s Fighting Raw Material Monsters
- 52-Week High / Low₹1,63,600 / ₹1,02,012
- Q3 FY26 Revenue₹8,050 Cr
- Q3 FY26 PAT₹692 Cr
- Q3 EPS (₹)₹1,631.25
- FY25 Full Year EPS₹5,258
- Book Value₹45,840
- Price to Book3.03x
- Dividend Yield0.17%
- Debt / Equity0.19x
- 3M Return-9.59%
The Tea: MRF delivered ₹8,050 crore revenue in Q3 FY26, highest in the dataset, but PAT jumped 137% YoY because Q3 FY25 was a disaster. Current quarter margin compression is real. Raw material costs are eating lunch money. The stock is expensive at 25.7x P/E (sector median 13x), yet here’s the kicker — AAA credit rating from CARE, record revenue, and 30% domestic market share. Something doesn’t add up in the valuation story.
02 — Introduction
Welcome to the Tyre Aisle of Suffering
Madras Rubber Factory — MRF — has been in this business since 1960. The company is not trying to pivot into fintech. There is no AI play. It makes rubber. Circular rubber. For wheels. And it dominates the Indian tyre industry like no other company dominates any consumer durable category in India. Period.
Market share: 30%. Revenue: ₹30,180 crore (TTM). Installed capacity: 95.85 million tyres annually. Distribution network: 5,000+ dealers. The company makes tyres for Maruti, Hyundai, Mahindra, Ashok Leyland, Tata Motors, and basically anyone with four wheels and the good sense to use MRF.
But here’s the plot: Q3 FY26 posted the highest quarterly revenue in the entire dataset history (back to Dec 2022). Yet margins are compressing like a tyre under a truck. Why? Global rubber prices. International crude prices. Supply shocks in Southeast Asia. Things that have nothing to do with MRF’s execution but everything to do with MRF’s bottom line.
The stock is down 9.6% in three months and up only 29.5% in one year. Fair? Unfair? That’s the conversation. Let’s untangle this mess with data, context, and just enough sarcasm to make you feel less lonely in the equity markets.
Note from Ratings: CARE Ratings reaffirmed AAA-Stable rating in September 2025 on MRF’s debt facilities. Translation: the company’s balance sheet is fortress-like. The business risk is market leadership. The financial risk is comfortable. The issue is cyclicality and commodity exposure — not credit quality.
03 — Business Model: Rubber Meets Reality
How MRF Prints Money — When Commodities Cooperate
The business model is straightforward: source natural rubber and crude-linked synthetics (like synthetic rubber, carbon black, rubber chemicals) → manufacture tyres at nine plants across India → sell through 5,000+ dealers to OEMs (21% of revenue), replacement market (70%), and exports (8%).
The magic is distribution dominance. In India’s replacement tyre market, dealers stock what’s convenient and profitable. MRF’s brand recall and dealer relationships mean MRF gets stocked. Simple. The replacement market is where 70% of revenue comes from — not from Maruti building new cars, but from 10 million vehicles already on Indian roads needing fresh rubber every 60,000 km.
Revenue mix for FY25: Truck & Bus (49%), 2W & 3W (19%), Passenger Car (13%), LCV/SCV (10%), Others (9%). This segmentation gives MRF a cushion. When CV demand dips, 2W can rise. When replacement is slow, OEM grows. It’s a diversified cash generator — except when input costs go haywire.
Market Share30%Domestic Tyres
Replacement %70%Revenue Mix
OEM %21%Revenue Mix
Export %8%Revenue Mix
Input Cost Reality: Natural rubber and crude oil derivatives form 60–65% of MRF’s cost structure. During FY25, international natural rubber prices spiked 25–30%, peaking at ₹230/kg. CARE’s assessment: rubber is expected to remain “firm” in FY26, meaning elevated but less volatile. Translation: margin compression will persist, just not at FY25 extremes.
💬 What irritates you more: a tyre that goes flat or a stock that compresses margins every quarter? Drop a comment!
04 — Financials Overview
Q3 FY26: The Numbers That Hurt and Help
Result type: Quarterly Results | Q3 FY26 EPS: ₹1,631.25 | Annualised EPS (Q3×4): ₹6,525 | FY25 Full Year EPS: ₹5,258
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 8,050 | 7,001 | 7,379 | +14.99% | +9.08% |
| Operating Profit | 1,399 | 835 | 1,126 | +67.5% | +24.2% |
| OPM % | 17.4% | 11.9% | 15.2% | +550 bps | +220 bps |
| PAT | 692 | 315 | 526 | +137.5% | +31.6% |
| EPS (₹) | 1,631.25 | 743.79 | 1,239.40 | +119.3% | +31.6% |
What Just Happened: Revenue grew 15% YoY, operating margin expanded 550 bps YoY, and PAT jumped 137.5%. Sounds brilliant. But here’s the rub: Q3 FY25 was absolutely pathetic (PAT ₹315 Cr, OPM 11.9%) because rubber prices peaked in September 2024. Q3 FY26 benefited from lower rubber prices compared to the year-ago period. YoY growth is an optical illusion when your comparison base is a disaster. The real story: margins are recovering but haven’t returned to historical norms (18% OPM in Q2 FY24).
05 — Valuation: Fair Value Range
Is MRF Worth ₹1,38,780 or Just Expensive?
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