Mumbai: Tyremaker MRF Ltd’s April-June profits surged on Monday, sending its shares to a 14-month high, on better sales of high-margin, aftermarket segment and lower raw material costs.
Shares of MRF ended up 16.58% at Rs4,454.90 in a flat Mumbai market.
The aftermarket segment makes up around 80% of sales, while the rest are sold to original equipment makers (OEMs).
“Our share between the segments has not changed but we are giving a further emphasis and focus on the aftermarket,” MRF executive vice president Koshy Varghese said.
In the first quarter, MRF reported a net profit of Rs1.25 billion on sales of Rs14.33 billion. This compares with a net profit of Rs318.6 million on Rs12.73 billion sales last year.
Sales to OEMs were flat, and the bulk of the sales came from aftermarket segment, Varghese said, declining to quantify.
“It was primarily because two of our factories were closed. Therefore we could not supply those products to the OEMs.”
MRF has been battling labour unrest at its Arkonam and Puducherry plants in southern India and had declared temporary lock outs in these units in April-June.
“Both are running now. The factory at Arkonam is running at 80% production, the one in Puducherry is running single shift,” Varghese said.
The quarter was also helped by a decline in raw material prices particularly natural rubber, which accounts for about 60% of the cost of a tyre, which has fallen around 17% on year in April-June.