MRF Share Price: CLSA ups target to Rs 1.78 lakh, but MOFSL sees 23% downside — What should investors do?

MRF Share Price: Shares of MRF Ltd. traded in red on Monday slipping 0.20 per cent at Rs 1,57,090. Motilal Oswal Financial Services reaffirmed its ‘Sell’ rating on the tyre major, citing weaker-than-expected top-line performance in the September quarter. The brokerage has set a 12-month target price of Rs 1,21,162, implying a 23 per cent downside from Friday’s closing level.

Adding to the divergence in analyst views, CLSA maintained its ‘Accumulate’ rating on the stock and raised its target price to Rs 1,78,536 from Rs 1,63,431, reflecting a more constructive medium-term outlook.

Q2 profit in line with estimates; revenue misses expectations

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MRF reported a consolidated net profit of Rs 525.64 crore for Q2FY26, an 11.7 per cent increase over Rs 470.7 crore in the same quarter last year. Sequentially, profit rose 5 per cent from Rs 500.47 crore.

Revenue from operations came in at Rs 7,378.72 crore, up 7.2 per cent year-on-year, but down 3.9 per cent quarter-on-quarter from Rs 7,675.69 crore. Total expenses climbed to Rs 6,788 crore, rising 6.8 per cent year-on-year, but declining 4.8 per cent from the previous quarter.

Motilal Oswal said profit was in line with its estimates, but topline weakness stemmed from temporary GST-driven destocking by distributors and seasonal softness. However, the company delivered an Ebitda margin of 15 per cent, beating expectations of 14.2 per cent, supported by lower input costs.

Demand disruption from GST cuts; margin outlook capped

The brokerage highlighted that GST rate cuts toward the end of Q2 led to a short-term disruption in replacement demand. However, Motilal Oswal believes the lower tax structure will support the sector in the coming quarters.

It also noted that MRF’s competitive positioning has weakened in recent years, with reduced pricing power in both the Passenger Car Radial (PCR) and Truck & Bus Radial (TBR) segments. The company is expected to continue focusing on market-share recovery, which may restrict margin expansion despite easing raw material costs.

Motilal Oswal forecasts a 13 per cent earnings CAGR over FY25–28.

CLSA outlook: Positive medium-term view

In contrast, CLSA maintained an ‘Accumulate’ rating on MRF, highlighting improving fundamentals and potential demand tailwinds. The global brokerage revised its target price upward to Rs 1,78,536, from Rs 1,63,431 earlier.

Stock price movement

MRF shares rose as much as 1 per cent intraday to Rs 1,58,500, before paring gains to trade 0.32 per cent higher at Rs 1,57,950 around 9:33 am. The Nifty 50 was up 0.25 per cent at the time.

The stock has gained 21 per cent so far in 2024, outperforming the Nifty 50’s 9.8 per cent rise. MRF currently has a market capitalisation of Rs 67,167.83 crore.