How CEAT, MRF and Apollo Tyres Outperformed the Tyre Industry in FYQ42023

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CEAT, MRF and Apollo Tyres: The Top Performers in the Tyre Industry

The Tyre industry has witnessed a remarkable recovery in the past year, thanks to the lower raw material costs, higher demand from the auto sector, improved product mix and pricing power, and increased exports. Among the Tyre companies, CEAT, MRF and Apollo Tyres have emerged as the top performers in terms of profit growth and share performance. In this blog post, we will look at how these three companies have achieved their stellar results and what are their future prospects.

CEAT: Five-Fold Jump in Q4 Profit

CEAT Ltd reported a more-than-five-fold increase in its consolidated net profit to Rs 134 crore ($16.40 million) in the fourth quarter ended March 31, 2023, from Rs 25.25 crore a year ago1. The company’s revenue from operations rose by 24% year-on-year to Rs 2,279 crore, while its earnings before interest, tax, depreciation and amortization (EBITDA) margin expanded by 470 basis points to 13.6%. The company attributed its strong performance to the lower raw material costs, especially natural rubber and crude oil; higher demand from the passenger vehicle (PV), two-wheeler (2W) and farm segments; better product mix with higher share of radial Tyres; and price hikes taken during the year.

For the full financial year 2023, CEAT posted a 73% growth in net profit to Rs 361 crore and a 6% growth in revenue to Rs 7,591 crore. The company also announced a final dividend of Rs 18 per share. CEAT’s share price has risen by about 120% in the past one year and by about 25% in the past one month. The company has a market capitalization of Rs 7,232 crore as of May 10, 2023.

MRF: Double-Digit Growth in Q4 Profit

MRF Ltd reported a double-digit growth in its consolidated net profit to Rs 679 crore in the fourth quarter ended March 31, 2023, from Rs 293 crore a year ago2. The company’s revenue from operations grew by 44% year-on-year to Rs 5,403 crore, while its EBITDA margin improved by 390 basis points to 18.4%. The company benefited from the lower raw material costs, higher demand from the CV and PV segments, increased exports, and favorable currency movements.

For the full financial year 2023, MRF posted a 35% growth in net profit to Rs 1,555 crore and a 12% growth in revenue to Rs 16,239 crore. The company also declared a final dividend of Rs 94 per share. MRF’s share price has risen by about 42% in the past one year and by about 7% in the past one month. MRF is the most expensive stock in India, with a share price of Rs 97,432.55 and a market capitalization of Rs 41,560 crore as of May 10, 2023.

Apollo Tyres: Four-Fold Jump in Q4 Profit

Apollo Tyres Ltd reported a nearly four-fold rise in its consolidated net profit to Rs 427 crore ($52.21 million) in the fourth quarter ended March 31, 2023, from Rs 113 crore a year earlier. The company’s revenue from operations rose by 12% year-on-year to Rs 6,247 crore, while its EBITDA margin increased by 460 basis points to 14.7%. The company attributed its robust performance to the lower raw material costs, strong domestic auto sales, improved product mix and pricing power, and increased exports.

For the full financial year 2023, Apollo Tyres posted a 73% rise in net profit to Rs 1,105 crore and a 17.3% growth in revenue to Rs 24,568 crore. The company also recommended a final dividend of Rs 4 per share. Apollo Tyres’ share price has risen by about 85% in the past one year and by about 12% in the past one month. The company has a market capitalization of Rs 23,403 crore as of May 10, 2023.

Outlook

The outlook for the Tyre industry and the three companies remains positive, as they are expected to benefit from the favorable demand-supply dynamics, lower raw material costs, higher exports, and improved product mix and pricing power. However, some challenges may also arise, such as the second wave of Covid-19 pandemic and its impact on the auto sector; the rising competition from domestic and global players; the volatility in currency and commodity prices; and the environmental and regulatory issues. Therefore, the Tyre companies need to continue their innovation and differentiation strategies, focus on customer satisfaction and loyalty, and maintain their operational efficiency and financial discipline to sustain their growth and share performance in the long run.

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