MRF and Goodyear India Surge up to 16% on Strong Q3FY26 Profits

Introduction: Tyre Stocks Gain Momentum

Shares of major tyre companies MRF and Goodyear India experienced a significant rally on Friday, with prices surging up to 16% during intra-day trading on the BSE. The sharp rise in investor sentiment was a direct response to the companies' strong financial results for the third quarter of the financial year 2025-26. Goodyear India's stock jumped 16% to reach ₹920, while MRF surged 10% to hit ₹149,000. This positive momentum also lifted other players in the sector, including Ceat and Balkrishna Industries, which saw their shares rise by 3% and 2%, respectively.

MRF's Blockbuster Quarter

MRF delivered a standout performance in Q3FY26, reporting a consolidated profit after tax (PAT) of ₹691.83 crore. This figure represents a remarkable 119% year-on-year (YoY) increase from the ₹315.46 crore profit recorded in the same quarter of the previous fiscal year. The company's revenue from operations also grew by a healthy 15% YoY, reaching ₹8,050 crore.

A key highlight of MRF's results was the substantial improvement in its operational efficiency. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded significantly to 17.38% in Q3FY26, a sharp rise from 11.92% in Q3FY25. This indicates better cost management and profitability despite a one-time impact of ₹77.2 crore related to new labour codes. Adding to the positive news for shareholders, MRF's board approved a second interim dividend of ₹3 per equity share.

Goodyear India's Profitability Shines

Goodyear India also posted stellar Q3FY26 results, with its standalone PAT more than doubling to ₹24.63 crore from ₹9.48 crore in the corresponding quarter of the previous year. This impressive profit growth was achieved on the back of a healthy operational performance. Interestingly, this bottom-line strength came even as the company's revenue from operations saw a slight decline of 3.9% YoY to ₹606.91 crore. The results underscore the company's ability to enhance profitability through operational improvements, even in the face of modest revenue figures.

Key Financial Highlights: Q3 FY2026

Industry Trends and Management Outlook

The strong performance of tyre companies was supported by healthy volume growth across the industry. According to the management at Ceat, this growth was driven by robust momentum in both the Original Equipment Manufacturer (OEM) and replacement market segments. A continued trend towards premiumisation, where consumers opt for higher-value tyres, also contributed positively.

Management commentary suggests that demand is sustaining, partly aided by recent GST cuts. The replacement market, in particular, staged a recovery with mid-teens growth following GST rationalization. This growth was attributed to an improvement in underlying consumption rather than just channel restocking. Looking ahead, management expects replacement demand to grow at a high single-digit rate in FY27 as inventory levels have normalized.

Brokerage Views and Market Projections

Analysts remain confident about the near-term growth prospects for the domestic market. Favourable GST rates, positive rural sentiment, and the ongoing premiumisation trend are expected to be key drivers. JM Financial Institutional Securities noted that in the OEM segment, demand for Medium and Heavy Commercial Vehicles (MHCV) is showing early signs of recovery, with high double-digit growth expected. Passenger vehicle (PV) and two-wheeler (2W) demand is also projected to sustain double-digit growth.

Meanwhile, analysts at ICICI Securities upgraded Balkrishna Industries to a 'BUY' rating. They pointed out that the company, a leader in the off-highway tyre (OHT) segment, stands to benefit from a reduction in reciprocal tariffs from 50% to 18%, particularly as the US is a key export market.

Analysis and Forward Look

The third-quarter results from MRF and Goodyear India highlight the resilience and profitability of the tyre sector. The ability to expand margins, as demonstrated by MRF, even while managing rising input costs, has bolstered investor confidence. Goodyear's performance shows that operational efficiency can drive profits even without top-line growth.

However, the industry is not without its challenges. The cost of raw materials, particularly natural rubber, remains a key variable that could impact margins in the coming quarters. While the demand outlook appears strong, its sustenance beyond the next few quarters is something that market participants will continue to monitor closely. The strong stock performance reflects renewed interest in manufacturing companies that are delivering consistent earnings growth, but future performance will depend on navigating cost pressures and maintaining demand momentum.

Conclusion

The impressive Q3FY26 earnings from MRF and Goodyear India have rightfully energized the tyre sector, leading to a significant rally in their stock prices. Strong profit growth, margin expansion, and a positive demand environment have set a confident tone. As the industry moves forward, the focus will be on sustaining this growth trajectory while effectively managing input costs and broader economic factors.