Q2 FY27 results analysis · November 10, 2026
MRF Ltd Q2 FY27 Results Analysis: PAT Falls 27%, Margin Compresses 419 bps
−26.6%PAT year on year, Rs. 386.99 Cr
Source: Quarterly results filing (BSE)
Quick summary
MRF Ltd's Q2 FY27 numbers came in soft, with revenue of Rs. 8,660.19 Cr (+17.37% YoY) and PAT growth of -26.63% YoY. Here's a quick read of what worked, what to watch, and what management said.
Quick Details
| Results date | November 10, 2026 |
|---|---|
| Revenue (Q2) | Rs. 8,660.19 Cr (+17.37% YoY) |
| PAT (Q2) | Rs. 386.99 Cr (-26.63% YoY) |
| EBITDA margin | 11.06% (-419 bps YoY) |
| EPS (Q2) | Rs. 912.46 (-26.63% YoY) |
Quarter Snapshot
MRF delivered 17.37% YoY revenue growth to Rs.8,660.19 Cr on demand revival after the September 2025 GST reforms, but a 43.15% YoY surge in material costs drove EBITDA margin down 419 bps to 11.06% and PAT down 26.63% to Rs.386.99 Cr. The cost surge is also straining the working-capital cycle, with H1 FCF negative at Rs.(370.93) Cr and current borrowings up 50.41%. No numeric management guidance exists to score, and the balance sheet remains net cash with CARE AAA ratings reaffirmed.
Q2 FY27 Expectations vs Results
| Driver | Expected before results | What happened | Verdict |
|---|---|---|---|
| Revenue / demand | "replacement and OE offtake across CV/PV/2W reads ahead, with festive-onset momentum; farm flat-to-behind" | Consolidated revenue +17.37% YoY, +2.91% QoQ; H1 +13.43% | Played out |
| Margins / costs | "the Q2 cost line reads compressing — likely more than Q1's" | EBITDA margin ex-OI 11.06% vs Q1FY27 11.77% and Q2FY26 15.25%; materials 75.66% of revenue | Played out |
| Inventory revaluation cushion | "could see some inventory revaluation gain cushioning — but not fully offsetting" | Inventories +32.24% to Rs.7,163.15 Cr; Rs.718.86 Cr quarterly build deferred cost into stock, yet margin still compressed — partial cushion consistent with expectation; old/new-stock cost split not disclosed | Partially |
| Tractor moderation | "tractor retail went ex-growth in August (+0.84% YoY)" | No product split in the filing | Not observable |
| CV "relatively flat" guidance test | "CV grew +14.45% in August and +37.62% in September" (per pre-call note) | No volume data in the filing | Not observable |
| Export recovery (EU anti-dumping duty, eff. 6 Jul 2026, per pre-call note) | Supportive for exports | No geography split in the filing | Not observable |
| Interim dividend | Board to consider on 10 Nov 2026 | Rs.3/- per share (30%) declared; record date 17 Nov 2026 | Played out |
| Kerala CST residual Rs.36.19 Cr | Decision on challenge expected to be watched | Not addressed in the filing — remains open | Not observable |
Read our full results preview.
Management Guidance vs Delivery
| What management said | What happened | Verdict |
|---|---|---|
| "The impact of higher costs on margins is expected to continue" (Q1 FY27 press release) | EBITDA margin ex-OI fell further to 11.06% (Q2FY27) from 11.77% (Q1FY27) vs 15.25% (Q2FY26); materials consumed 75.66% of revenue vs 69.57% in Q1 | Confirmed |
| Price increases and cost-management measures implemented to partially offset cost increases (Q1 FY27 press release) | Revenue +17.37% YoY while materials consumed grew +43.15% — pass-through is visibly partial; no quantum of price increases is disclosed — direction consistent, quantum not derivable | Partially corroborated |
| "Strong operational management, cost control… enabled us to maintain profitability" (FY26 Annual Report) | PAT margin 4.47% in Q2FY27 vs 7.15% in Q2FY26 — profitability not maintained through the cost surge | Contradicted for this quarter |
Key Numbers, Quarter by Quarter
| Metric | Q1 FY26 | Q2 FY26 | Q1 FY27 | Q2 FY27 |
|---|---|---|---|---|
| EBITDA margin ex-OI | 13.95% | 15.25% | 11.77% | 11.06% |
| PAT margin | 6.54% | 7.15% | 5.89% | 4.47% |
| Materials % of revenue | 60.23% | 62.04% | 69.57% | 75.66% |
Key Investment Insights
Key Positives
- Consolidated revenue grew 17.37% YoY to Rs.8,660.19 Cr; H1 FY27 revenue up 13.43% YoY to Rs.17,075.69 Cr
- Employee and other expenses as a share of revenue fell YoY; other expenses grew only 0.93% QoQ
- Net cash position of ~Rs.4,313.30 Cr with total borrowings of Rs.3,372.79 Cr; CARE AAA and CARE A1+ ratings reaffirmed
- Subsidiaries contributed Rs.17.84 Cr (4.61%) to consolidated PAT with no drag
- Board declared an interim dividend of Rs.3/- per share (30%); Rs.150 Cr NCDs redeemed in February 2026
Risk Factors
- Cost of materials consumed rose 43.15% YoY, reaching 75.66% of revenue vs 62.04% in Q2FY26
- EBITDA margin ex-other income compressed to 11.06% from 15.25% YoY (−419 bps) and 11.77% QoQ
- PAT declined 26.63% YoY to Rs.386.99 Cr; PAT margin fell to 4.47% from 7.15%
- Inventory build of Rs.718.86 Cr in the quarter; H1 inventories absorbed Rs.1,746.33 Cr of cash
- H1 FCF was negative at Rs.(370.93) Cr; current borrowings rose 50.41% to Rs.3,295.96 Cr
- Unhedged natural-rubber exposure of Rs.4,710.25 Cr per FY26 disclosure, with the cost surge materializing
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Disclaimer: This results analysis is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.