MRF Reports 28% Drop in Second-Quarter Profit Amid Rising Raw Material Costs

Tyre manufacturer MRF reported a near 28% fall in its second-quarter profit on Tuesday, as higher costs for raw materials overshadowed strong demand for its products.

The company's profit dropped to ₹369 crore ($39.29 million) in the quarter ended September 30, down from ₹512 crore during the same period a year earlier. Despite the decline in profitability, revenue from operations rose by almost 18% to 85.24 billion rupees, supported by steady dispatches from automakers that kept demand for tyres resilient through the July-September quarter.

However, total expenses grew by more than 22%, driven largely by a sharp increase in material costs linked to geopolitical tensions in the Middle East. Specifically, the cost of materials consumed grew by about 44% during the quarter.

Indian tyre makers faced elevated raw material costs during the period as supply shortages and adverse weather in key producing countries kept natural rubber prices high, forcing companies to implement price hikes. These pressures squeezed margins across the industry, with peers JK Tyre and CEAT also reporting lower second-quarter earnings.

Alongside the financial results, MRF—which manufactures tyres certified by Suzuki for use in its superbikes—declared an interim dividend of three rupees per share for the financial year ending March 31.

"The financial results from MRF highlight a classic business challenge where top-line growth is effectively neutralized by unforeseen supply chain pressures and rising input costs. When external factors like adverse weather and geopolitical conflicts drive up raw material prices such as natural rubber, even established manufacturing companies experience margin compression. For businesses across sectors, this emphasizes the critical need for robust cost-management strategies and agile supply chain planning to protect profitability during inflationary cycles." — Dr. Shishir Gupta, Founder & CEO, StartupLanes