MRF's Q2 profit falls 28% as costs surge; FY25 ad spend at 0.7% of sales

MRF Limited's profit fell nearly 28% in the September quarter as raw material costs surged, even as demand pushed revenue up about 18%.

Standalone net profit was ₹369.15 crore, compared to ₹511.59 crore a year ago, while consolidated profit fell 26.6% to ₹386.99 crore. Standalone revenue from operations grew 17.6% to ₹8,523.96 crore. Standalone cost of materials consumed rose about 44% to ₹6,538.07 crore, and consolidated total expenses climbed 21.8% to ₹8,269.77 crore.

Advertising is not itemised in MRF's quarterly results, so the exact Q2 figure is not public. The most recent recorded number is ₹190 crore for FY25, or 0.7% of net sales. A proxy is available in standalone other expenses, the head that typically houses such costs, though it covers many other items. That line stood at ₹1,097.47 crore in Q1 FY26, rose to ₹1,231.39 crore in Q4 FY26 and reached ₹1,274.41 crore in Q1 FY27, a 16% annual increase that outpaced the 9.7% growth in revenue.

The spending sits against a record year. MRF crossed ₹30,000 crore in sales in FY26, with standalone revenue from operations of ₹30,652.08 crore, and standalone other expenses for that year totalled ₹4,531.19 crore. The company said growth came in both replacement and OE segments, aided by new launches across truck, passenger and two-wheeler tyres, and that it has become the most preferred tyre supplier to electric vehicles.

Operating margins had improved in FY26, with a standalone EBITDA margin of 15.5%, up 120 basis points, according to a brokerage analysis. That cushion thinned in Q2. Natural rubber prices stayed elevated on supply shortages and adverse weather in key producing countries, and costs linked to the war in the Middle East added to the strain, forcing tyre makers to raise prices.

The balance sheet shows heavier outlays. Standalone inventories rose to ₹7,083.63 crore at the end of September from ₹5,337.66 crore in March. Standalone capital expenditure for the half year was ₹1,001.60 crore, up from ₹618.42 crore. Standalone net cash from operating activities for the half year fell to ₹1,238.76 crore from ₹2,015.93 crore.

The board declared an interim dividend of ₹3 per share, with a record date of November 17. Until MRF itemises a newer figure, the ₹190 crore from FY25 remains the latest public marker of its advertising budget.