MRF margin falls as costs outpace revenue growth for a second quarter
Operating margin narrowed 2.19 percentage points year on year, leaving MRF below the 12.93% median for 145 reported Consumer Discretionary peers.
Filed 11 Aug 2026, 12:28 IST · MRF Ltd (MRF)
Key takeaways
- Consolidated operating margin fell 2.19 percentage points year on year to 11.77% as expenses grew +12.42%, faster than revenue at +9.64%.
- Net profit declined -1.02% year on year to Rs 495.35 cr despite a 1.60 percentage-point reduction in the tax rate.
- Other income contributed 30.02% of pre-tax profit, while the stock fell -1.99% on the results day against a median post-results move of 1.18%.
Price around the results
Revenue rose, but profit weakened
Consolidated revenue increased +9.64% year on year to Rs 8,415.50 cr, but operating profit declined -7.52% to Rs 990.63 cr. Net profit fell -1.02% to Rs 495.35 cr as the weaker operating result outweighed lower interest and tax costs. Sequentially, revenue grew +4.62%, while net profit dropped -29.46%.
Costs drove the 2.19-point margin decline
Expenses grew +12.42% year on year, faster than revenue, reducing operating margin by 2.19 percentage points. The sequential squeeze was sharper: expenses rose +10.17% against revenue growth of +4.62%, cutting margin by 4.45 percentage points. Operating margin has now declined for two consecutive quarters, from 17.38% in Q3FY26 to 16.22% in Q4FY26 and 11.77% in Q1FY27.
Profit quality was partly supported by non-operating income
Other income rose +54.28% year on year and accounted for 30.02% of pre-tax profit. The tax rate also fell 1.60 percentage points year on year to 23.76%, cushioning the effect of lower operating profit. MRF's 11.77% operating margin was 1.16 percentage points below the 12.93% median of 145 Consumer Discretionary peers that had reported.
The initial stock reaction was weaker than usual
MRF fell -1.99% on the results day, with volume at 3.97 times the reference level. In the last eight results reactions, the stock rose twice and fell six times, with a median absolute move of 1.18%. The decline was therefore larger than its typical move, though within the range of its recent reactions.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹8,416 cr | ₹8,044 cr | +4.62% | +9.64% |
| Other income | ₹195 cr | ₹153 cr | +27.47% | +54.28% |
| Expenses | ₹7,425 cr | ₹6,739 cr | +10.17% | +12.42% |
| Operating profit | ₹991 cr | ₹1,305 cr | -24.08% | -7.52% |
| Operating margin (%) | 11.77% | 16.22% | — | — |
| Interest | ₹88 cr | ₹86 cr | +2.32% | -10.24% |
| Depreciation | ₹448 cr | ₹442 cr | +1.35% | +4.41% |
| Profit before tax | ₹650 cr | ₹930 cr | -30.12% | -3.10% |
| Tax | ₹154 cr | ₹227 cr | -32.15% | -9.22% |
| Net profit | ₹495 cr | ₹702 cr | -29.46% | -1.02% |
| EPS (₹) | ₹1167.97 | ₹1655.80 | -29.46% | -1.02% |
Operating margin of 11.77% compares with a Consumer Discretionary sector median of 12.93% across 145 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.99% | -1.54% |
Volume on the results session was 3.97× its 20-day average.
What to watch
- Whether operating margin recovers from 11.77% after the 4.45 percentage-point sequential decline.
- Whether expense growth moderates from +12.42% year on year against revenue growth of +9.64%.
- Whether other income remains near 30.02% of pre-tax profit.