MRF Shares Surge 9% as Q3 Profit Doubles to ₹692 Crore

Introduction

Shares of tyre manufacturer MRF Ltd. experienced a significant rally on Friday, surging as much as 9% to reach ₹1,47,140. The sharp buying interest was triggered by the company's announcement of robust financial results for the third quarter ended December 31, 2025, which featured a more than twofold increase in net profit and a declaration of an interim dividend.

Stellar Financial Performance in Q3

MRF reported a consolidated net profit of ₹691.83 crore for the third quarter of the financial year 2025-26. This represents a massive 119% year-on-year (YoY) increase compared to the ₹315.46 crore profit recorded in the same period of the previous fiscal year. The strong bottom-line growth was supported by healthy top-line performance, with consolidated revenue from operations growing by 15% YoY to ₹8,050.43 crore from ₹7,000.82 crore a year earlier. The company's total income for the quarter stood at ₹8,175.01 crore.

Margin Expansion Drives Profitability

A key driver of the impressive profit growth was a substantial improvement in operational efficiency. The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) surged by 68% to ₹1,399 crore, up from ₹834 crore in the corresponding quarter last year. This led to a significant expansion in the EBITDA margin, which improved to 17.4% from 11.9% a year ago. This 550 basis point improvement underscores MRF's ability to manage costs effectively and leverage strong demand, even as total expenses rose to ₹7,180 crore from ₹6,675 crore in the year-ago period.

Operational Highlights and Market Demand

The company's performance was bolstered by healthy volume growth across its key markets. Management commentary from across the sector indicated that demand remained strong, supported by robust momentum in both the Original Equipment Manufacturer (OEM) and replacement segments. The ongoing trend of premiumisation in the automotive sector also contributed positively to the company's revenue mix. Despite the strong performance, the company did report a one-time exceptional expense of ₹77.20 crore related to an increase in gratuity and leave liability arising from legislative amendments under new labour codes.

Dividend Announcement for Shareholders

Adding to the positive sentiment, the MRF board declared a second interim dividend of ₹3 per equity share for the financial year ending March 31, 2026. This is equivalent to a 30% payout on the face value of the share. The company has fixed Friday, February 13, 2026, as the record date to determine shareholder eligibility for the dividend. The dividend payment is scheduled to be completed on or after Friday, February 27, 2026.

Q3 FY26 Financial Summary

Market Reaction and Stock Performance

The market responded enthusiastically to the strong earnings report. MRF's stock price jumped 9% to an intra-day high of ₹1,47,140 on the BSE. The stock, known for being one of the most expensive in India by absolute price, saw a spurt in trading volume by more than 10 times. The results reinforced investor confidence in the company's ability to generate strong cash flows and protect its margins. Over the past year, the stock has delivered a return of approximately 29%, reflecting sustained investor interest in its consistent growth.

Industry Context and Outlook

The tyre industry has benefited from a favourable demand environment, aided by factors such as GST rationalisation and positive rural sentiment. The outlook for both replacement and OEM demand remains stable. Analysts expect high single-digit growth in the replacement market for FY27, while the OEM segment is anticipated to see double-digit growth, particularly in passenger vehicles and two-wheelers. This supportive industry backdrop provides a solid foundation for MRF's continued performance.

Conclusion

MRF's third-quarter results highlight its strong execution capabilities and dominant market position. The significant jump in profitability and margin expansion, coupled with a shareholder-friendly dividend, has been well-received by investors. The company's ability to navigate rising input costs while capitalizing on robust demand positions it well for sustained growth. Investors will now look forward to the dividend payout and monitor whether the company can maintain this strong earnings momentum in the upcoming quarters.