MRF Ltd Q1FY26 – Tyres, Toys & Taxes: India’s Costliest Stock Still Rolling
1. At a Glance
MRF Ltd (CMP ₹1,48,545; Market Cap ~₹63,000 Cr) is the Sachin Tendulkar of the tyre world—consistent, iconic, but occasionally out of form. It’s the most expensive stock in India in absolute price terms, but don’t be fooled, a stock split is rarer than free Wi-Fi on Indian Railways.
In Q1FY26, MRF clocked sales of ₹7,676 Cr (+6.7% YoY), but PAT slipped 12.4% to ₹500 Cr. Full-year FY25 sales stood at ₹28,632 Cr with net profit ₹1,799 Cr (NPM ~6.6%). P/E is a juicy 35 vs industry ~31, P/B is 3.4, and ROCE is 13.6%. Debt is a manageable ₹3,771 Cr (Debt/Equity 0.2). Over 6 months, stock returned +32%, but over 1 year just 5%. Basically, it’s a heavyweight boxer who wins big fights but takes too long to deliver knockouts.
2. Introduction
MRF started in 1946 as a toy balloon maker. Today, it makes tyres for everything—cars, bikes, buses, trucks, tractors, OTRs, you name it. Oh, and it still sells toys through Funskool (because why not?). From sports goods to paints to pace bowling academies, MRF dabbles everywhere but keeps its crown firmly in tyres with a 30% domestic market share.
The irony? The company makes things that roll—tyres, balls, toys—but its own EPS rolls downhill whenever raw material prices spike. In FY24, revenue grew 9% but profit fell ~13%. Investors don’t care though; owning MRF shares is like owning a Birkin bag—status first, returns later.
Question for you: Would you buy one MRF share for the price of a Royal Enfield, or just buy the bike and keep rolling?
3. Business Model – WTF Do They Even Do?
MRF is a tyre manufacturer by identity but a diversified uncle by hobby.
Tyres & Tubes (97% revenue): Covers the full spectrum—from scooters to 18-wheelers. Segments: Truck/Bus (44%), 2W/3W (15%), Passenger cars (11%), LCV/SCV (10%). Replacement demand (71% of sales) is the real breadwinner. OEM demand is cyclical (21%), while exports (8%) are to neighbors like Nepal, Bangladesh, and Philippines.
Non-Tyre Stuff:
Funskool Toys: Board games, puzzles—basically teaching kids to lose gracefully before they grow up to lose money in stocks.
Sports Goods: Cricket bats, balls, and rally tyres—MRF Pace Foundation has produced bowling legends like Glenn McGrath-trained pacers.
Paints & Coats: A side hustle so small, even Google sometimes forgets it.
Distribution: 5,000+ dealers across India. Manufacturing: 9 plants with 85M tyre capacity.
So yeah, the core model is simple: burn rubber, sell tyres, dominate replacement market. Side gigs (toys, sports, paints) are just hobby projects funded by your tyre purchases.
Commentary: Top line is growing, but profits are skidding due to margin compression. It’s like scoring 90 runs but still losing the match because wickets kept falling at the other end.
5. Valuation Discussion – Fair Value Range Only
Method 1 – P/E Method: Industry median P/E = 31. Annualised EPS = ₹4,720.
Lower range (28×): ₹1,32,160
Upper range (35×): ₹1,65,200
Method 2 – EV/EBITDA: EV = ₹66,395 Cr; EBITDA FY25 = ₹3,996 Cr → EV/EBITDA ~16.6. Peers ~12–15. Fair Value Range = ₹1,20,000 – ₹1,45,000.
Fair Value Range (Consolidated): ₹1,32,000 – ₹1,65,000.
⚠️ Disclaimer: This fair value range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
Plant Strike (Sep 2025): Workers at Tiruvottiyur plant struck work; MRF says “immaterial impact.” Translation: “Yes, but please don’t panic.”
Legal Battles: Still fighting ₹622 Cr CCI penalty from 2012 cartelization allegations—now in Supreme Court. That case has lasted longer than some marriages.
Renewables Push: Picked up stakes (11–27%) in First Energy and Clean Max Omni to secure green power. Tyres may be black, but MRF wants its image green.
