MRF Q2 Profit Falls 27% on Softer Tyre Margins

Tyre maker MRF (NSE: MRF) posted higher revenue but lower profitability for the September quarter of FY27, as higher raw material expenses hit the company’s margins.

The company’s consolidated revenue grew by over 17% YoY while its net profit was down by about 27%. The difference underscores the impact of input costs on the tyre industry even as sales remain robust.

MRF Q2FY27 Results: Profit falls, revenue rises

MRF’s consolidated revenue from operations for the quarter ended Q2FY27 was ₹8,660.19 crore, against ₹7,378.72 crore for the quarter ended Q2FY26.

Revenue increased 17.4% YoY, 2.9% QoQ.

However, profit after tax fell to ₹386.99 crore from around ₹527.43 crore in the same quarter a year ago.

Net profit was down by 21.9% to ₹495.35 crore.

MRF's operating margin fell from some 15.3% to 11.1% in the same period.

This contraction is especially important considering that revenue continued to grow. It means that the increase in sales was not enough to cover the increase in operating costs.

Why MRF had margin pressure?

The tyre industry depends heavily on natural rubber, synthetic rubber, carbon black and chemicals from petroleum.

A rise in the prices of these materials can have a quick impact on production costs.

The company saw an increase in input costs in Q2FY27, which impacted profitability of every unit of revenue.

These increases are normally passed on by tyre manufacturers in the price of the product. But different customer segments have different timing on price revisions.

The replacement market has a relatively direct adjustment of prices, whereas supplies to the automobile makers are more inclined to be contracted and negotiated pricing arrangements.

Thus, higher selling prices may not offset higher raw material costs in the short term.

MRF’s quarterly numbers reflect the mismatch clearly.

MRF Share Price Reaction Post-Results

Despite the decline in quarterly profit, MRF shares gained about 1.6% to ₹1,27,125 on November 11.

That is to say, the last reported earnings weakness did not lead to an equivalent decline in the share price during that session.

There are a number of factors that drive market prices beyond a profit of a single quarter, such as past declines, expectations about input costs and shifts in the broader equity-market sentiment.

The latest results, however, do not show margins in tyre manufacturing having recovered yet.

The company also declared an interim dividend of ₹3 per equity share for FY27 and fixed the record date as November 17, 2026.

What will decide MRF's next quarterly performance?

The price of raw materials is still the most immediate variable.

The cost of making tyres is affected by the cost of natural rubber, the price of chemicals linked to crude oil and currency movements.

Sales volumes will be influenced by demand from passenger vehicles, commercial vehicles, two-wheelers and the replacement market.

To see a recovery in profit margins some combination of lower input costs, improved product pricing, operating efficiencies or a more profitable sales mix would be required.

The September quarter is a case in point that demand and profitability do not always go hand in hand.

MRF’s revenue growth is still positive but the fall in earnings shows how quickly input inflation can hit the tyre business. It is not yet clear if selling-price adjustments and changes in commodity costs will narrow that gap in the coming quarters.