MRF Share Price Jumps 9% on Strong Q3 Profit Growth

Introduction

Shares of tyre manufacturer MRF Ltd. climbed as much as 9% on Friday, reaching a price of Rs 1,47,140, following the announcement of strong financial results for the third quarter ending December 2025. The company reported a significant increase in profitability and declared a second interim dividend, which spurred strong buying interest from investors.

Stellar Quarterly Performance

MRF's financial performance for the third quarter of the fiscal year 2026 demonstrated substantial growth. The company's consolidated net profit more than doubled, reaching Rs 691 crore, a significant increase from the Rs 316 crore reported in the same period of the previous year. This represents a year-on-year growth of approximately 120%.

Revenue from operations for the quarter also saw a healthy increase, growing by 15% year-on-year to Rs 8,050.43 crore from Rs 7,000.82 crore in Q3 FY25. The growth was supported by steady demand across both the Original Equipment (OE) and replacement market segments.

Financial Breakdown in Detail

The company's operational strength was clearly visible in its earnings before interest, taxes, depreciation, and amortization (EBITDA), which surged by 68% to Rs 1,399 crore from Rs 834 crore in the corresponding quarter last year.

Operational Efficiency Drives Margins

A key highlight of the quarter was the significant expansion in operating margins. MRF's EBITDA margin improved to 17.4%, a substantial increase from 11.9% a year ago. This 550 basis point expansion indicates improved cost efficiency and the positive impact of operating leverage. Despite total expenses rising to Rs 7,180 crore from Rs 6,675 crore, the robust revenue growth and margin improvement more than compensated for the increased costs, leading to a sharp rise in profitability.

Shareholder Rewards: Dividend Declared

Adding to the positive news for investors, MRF's Board of Directors declared a second interim dividend of Rs 3 per equity share for the financial year ending March 31, 2026. This dividend represents a 30% payout on the share's face value of Rs 10. The company has set February 13, 2026, as the record date to determine shareholder eligibility, with the dividend payment scheduled to occur on or after February 27, 2026.

Market Reaction and Investor Sentiment

The market responded strongly to the impressive quarterly report. MRF's stock price surged 9%, reflecting renewed investor confidence in the company's ability to deliver consistent earnings growth. While MRF remains one of the highest-priced stocks on the Indian market in absolute terms, the latest results suggest that investors are focusing on the strong underlying financial momentum rather than the high price tag.

Factors Fueling Growth

The company's management attributed the strong performance to several factors. A notable pickup in the rural economy, supported by a good monsoon, and increased demand following GST rate reductions have contributed to the sales momentum. This trend is expected to continue into the next quarter.

Company Outlook and Strategic View

Looking ahead, MRF anticipates that Original Equipment Manufacturers (OEMs) will increase production levels, driven by higher sales expectations and lower channel inventory. The government's increased allocation for infrastructure development is also expected to boost the commercial vehicle sector, a key market for MRF. Furthermore, the finalization of trade agreements with major economies like the EU and the US could open up new export opportunities for the company.

Key Financial Metrics

Here is a snapshot of MRF's key valuation and performance metrics as of February 6, 2026.

Conclusion

MRF's third-quarter results for FY26 highlight a period of strong operational performance, significant profit growth, and robust margin expansion. The positive market reaction and the dividend announcement underscore the company's solid financial health. Investors will be closely watching whether MRF can sustain this demand momentum and continue to execute its strategy effectively in the coming quarters.