Costs Share Raw Material Share

Raw Material 68% Natural Rubber 43%

Power & Fuel Cost 4% Nylon Tyre Cord Fabric 18%
Employee Cost 9% Carbon Black 11%
Misc Expenses 9% Rubber Chemicals 5%
SGA 9% Butyl Rubber 4%
Power
Natural Rubber 29% PBR 5% Other; 6.18% 4.04%
SBR; 3.43%
Nylon Tyre Cord Fabric 12% SBR 5%
PBR; 3.43% Employee Cost; 9.09%
Carbon Black 7% Other 9% Butyl Rubber; 2.75%
Rubber Chemicals 3% Rubber Chemicals;
Butyl Rubber 3% 3.43%
Carbon Black; 7.56% SGA; 9
PBR 3%
SBR 3%
Other 6%
Nyl on Tyre Cord Fa bri c ;
Ref: Phillip Capital Auto Ancilliary Report 12.36%
Natural Rubber; 29.54%
 Power & Fuel Cost;
Other; 6.18% 4.04% Mis c Expens es ; 9.09%
SBR; 3.43%
; 3.43% Employee Cost; 9.09%
er; 2.75%
hemicals;

7.56% SGA; 9.09%

Natural Rubber; 29.54%

 CV PV Others
FY05 72% 11% 17%
FY15 58% 20% 22%
FY16 55% 22% 23% CV PV Others
FY 21E 50% 24% 26% 100%
90% 17% 22% 23%
80% 11%
70% 20% 22%
60%
50%
40%
72%
30% 58% 55%
20%
10%
0%
FY05 FY15 FY16
CV PV Others

22% 23% 26%

20% 22%
24%

58% 55% 50%

FY15 FY16 FY 21E

 Domestic (International RSS 4 Thailand
2010 190 195
2011 208 211
2012 177 176
2013 166 155
2014 133 112

Pri ce (rs /ki l ogram)

Domestic (RSS 4 Kottayam) Internationa l RSS 4 Thai l and
2015 113 96 250
2016 134 131
2017 127 110
200

150

100

50

0
2010 2011 2012 2013 2014 2015 2016 2
 Ref: http://rubberboard.org.in/rubberprice.asp?url=earlyrubberprice.asp, Stockshastra: Tyre indsutry report

Internationa l RSS 4 Thai l and

2014 2015 2016 2017

stra: Tyre indsutry report
 Replacement
Year OEM Market Market
2009 7% 7%
2010 20% 10%
2011 35% 15%
2012 36% 18%
2013 40% 20% OEM Ma rket
2014 45% 23% 90%
2015 60% 28% 80%
2016 70% 38%
70%
2017 75% 42%
60%
2018 80% 50%
2019 80% 60% 50%
2020 80% 63% 40%
Ref: Phillip Capital: Auto Ancilliary Report
30%

20%

10%

0%
2008 2010 2012 2014
 OEM Ma rket Repl acement Ma rket
%

%
2008 2010 2012 2014 2016 2018 2020 2022
OEM 36
Replaceme 46
Export 18

Export; 18.00%

OEM; 36.00%

Repl acement;
46.00%
OEM; 36.00%
Year MHCV PV 2/3 Ws Total
FY 11 20 25 60 105
FY 12 20 27 62 109
FY 13 22 27 56 105
FY 14 22 26 58 106
FY 15 22 28 75 125
FY 16 22 34 79 135
FY 17 E 23 42 85 150 250
FY 18 E 24 46 92 162 2/3 Ws
FY 19 E 24 50 96 170
200
FY 20 E 24 55 100 179
FY 21 E 25 63 113 201
Ref: Phillip Capital Auto Ancilliary Report, Anand Rathi India Auto-Tyre Segment 150

Mn Units
Ref: Care Rating Report for tyre industry
100

50

0
FY 11 FY 12 FY 13 FY 14 FY
 2/3 Ws PV MHCV

6% CAGR

FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 E FY 18 E FY 19 E FY 20 E FY 21 E
MRF 29% 8.4100% Ref: Moneyworks4me.com, moneycontrol.com, economictime
Apollo 17% 2.8900%
JK Tyres 13% 1.6900%
Ceat 12% 1.4400%
Balkrishna 7% 0.4900%
Birla 5% 0.2500%
Bridgeston 4% 0.1600%
TVS Sricha 4% 0.1600%
TVS Srichakra; Others; 9.00%
Others 9% 0.8100% 4.00% MRF; 29.00%
16.3000% Bridgestone; 4.00%
Birla; 5.00%
Balkrishna; 7.00%

Ceat; 12.00% Apollo; 17.00%

JK Tyres; 13.00%
oneycontrol.com, economictimes.indiatimes.com, ndtvprofit & Annual Reports of different companies

9.00%
MRF; 29.00%

Apollo; 17.00%
 MRF Ceat JK Tyre Apollo
Market Share 29% 12% 13% 17%
Sales Growth Hist (from 2012) 15.7% 5.3% 1.8% 1.2%
Operating Income Growth Hist 35.8% 32.0% 37.3% 11.1%
Growth
Sales Growth Estimated 6.8% 8.0% 8.4% 6.7%
EPS Growth (from 2012) 34.2% 167.0% 60.3% 26.3%
ROE (2016) 41.2% 25.2% 32.0% 16.1%
ROCE (2016) 49.2% 29.2% 21.3% 18.7%
Profitability
PAT 2327.0 636.0 401.0 802.8
EPS (2016) 5489.0 111.9 17.7 15.8
Volume (1 Month) 15283.0 1062647.0 1808838.0 3973601.0
LTD/Cash flow 1.3 0.9 0.3 0.5
Risk
Beta (1 year) 1.1 1.4 2.0 1.5
Volatility (1 year) 1.9 2.3 2.8 2.1
P/E 20.4 22.9 11.6 13.2
EV/Sales 0.9 0.9 0.8 1.4
Valuation
EV/EBITDA 4.1 6.0 4.4 8.4
P/B 2.4 3.7 2.2 2.0
ROA (2016) 20.6% 11.9% 6.6% 7.9%
EV/EBIT 4.9 6.8 5.4 10.4
Debt/Equity 0.2 0.3 0.9 0.3
Mar Cap ( Rs Cr.) 29593.0 7686.0 3839.0 13153.0

Company Passenger cars LCV 2/3 wheeler T&B Speciality

Ceat 0.13 0.13 0.29 0.33 0.05

JK Tyre 0.37 0.06 0.232 0.282 -

Apollo 0.39 0.06 - 0.42 -

MRF 0.12 0.09 0.09 0.47 -

Balkrishna - - - - -
TVS Srichakra - - 1

Goodyear - - - - -
Balkrishna Goodyear TVS Srichakra Industry
7% 3% 4%
3.7% 3.5% 10.1% 6.4% Ref: Moneyworks4me.com, moneycontrol.com, econom
22.9% 17.8% 27.7% 24.2%
7.0% 8.5% 9.0% 6.2%
20.6% 16.2% 49.2% 46.1%
22.3% 22.9% 56.8% 26.3%
18.9% 35.8% 58.9% 28.4%
567.7 123.1 197.2 990.8
58.7 53.4 257.5 1626.1
173308.0 13955.0 8436.0 1055466.3
0.7 0.0 2.0 0.7
0.7 1.2 1.1 1.1
2.6 2.1 2.5 1.9
23.0 9.0 19.3 15.0
2.4 0.4 0.9 0.9
6.6 3.3 5.5 4.7
5.9 3.6 7.3 2.6
10.6% 10.6% 22.4% 11.5%
8.7 4.0 6.2 5.7
0.3 0.0 0.1 0.3
16481.0 2103.0 2997.0 13571.2

Growth
Farm Growth References Segment Rate
Ceat Annual
0.07 8.00% Report MHCV 7%

JK Tyre annual
0.06 8.45% report 2W 9%

Apllo tyres
0.01 6.72% annual report LCV 8%
Anand Rathi
0.12 6.76% Report PV 9.5%
- 7.00% BKT Report Ref: ICRA Report
9.00% 2 W only

- 8.50% Average taken

s4me.com, moneycontrol.com, economictimes.indiatimes.com, ndtvprofit & Annual Reports of different companies
 MRF Ceat JK Tyre Apollo Balkrishna Goodyear
Market Share 29% 12% 13% 17% 7% 3%
Sales Growth Hist 15.70% 5.26% 1.78% 1.21% 3.71% 3.51%
EBIT Growth Hist 35.81% 32.00% 37.30% 11.13% 22.90% 17.80%
Growth
EPS Growth 34.21% 167.03% 60.26% 26.28% 20.58% 16.19%
Sales Growth Est. 6.76% 8.00% 8.45% 6.72% 7.00% 8.16%
ROE 41.16% 25.21% 31.97% 16.08% 22.32% 22.91%
ROCE 49.17% 29.24% 21.31% 18.74% 18.87% 35.84%
Profitability
PAT 2327.00 636.00 400.96 802.76 567.67 123.10
EPS 5489.0 111.87 17.68 15.77 58.73 53.36
Volume 15283 1062647 1808838 3973601 173308 13955
LTD/CF 1.32 0.89 0.26 0.48 0.66 0.00
Risk
Beta 1.12 1.37 2.04 1.54 0.72 1.23
Volatility 1.93 2.3 2.84 2.1 2.57 2.08
P/E 20.4 22.89 11.57 13.23 23 9.01
EV/Sales 0.9 0.91 0.75 1.38 2.37 0.44
Valuation
EV/EBITDA 4.06 5.95 4.4 8.38 6.6 3.33
P/B 2.39 3.72 2.19 1.99 5.91 3.61
Industry Peers Industry
MRF Industry Peers
Peers Industry Goodyear
TVS IndustryTyres
Peers Industr
Apo
Lo
Peers Balkrishna
w

Sales Growth Hist Sales GrowthSales Hist Growth HistSales Growth Hist
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Volume
 TVS Srichakra Industry MRF Ceat JK Tyre Apollo BalkrishnaGoodyear TVS Srichakra
4% 29% 12% 13% 17% 7% 3% 4%
10.06% 6.38% 10.0 3.4 1.1 0.8 2.4 2.2 6.4
27.70% 24.17% 9.6 8.6 10.0 3.0 6.1 4.8 7.4
49.22% 46.12% 2.0 10.0 3.6 1.6 1.2 1.0 2.9
9.00% 6.23% 7.5 8.9 9.4 7.5 7.8 9.1 10.0
56.77% 26.32% 7.3 4.4 5.6 2.8 3.9 4.0 10.0
58.91% 28.39% 8.3 5.0 3.6 3.2 3.2 6.1 10.0
197.21 990.78 10.0 2.7 1.7 3.4 2.4 0.5 0.8
257.45 1626.10 10.0 0.20 0.03 0.03 0.11 0.10 0.47
8436 1055466 0.0 2.7 4.6 10.0 0.4 0.0 0.0
1.96 0.73 6.7 4.6 1.3 2.5 3.4 0.0 10.0
1.12 1.15 5.5 6.7 10.0 7.5 3.5 6.0 5.5
2.48 1.90 6.8 8.1 10.0 7.4 9.0 7.3 8.7
19.32 15.05 8.9 10.0 5.0 5.8 10.0 3.9 8.4
0.92 0.92 3.8 3.8 3.2 5.8 10.0 1.9 3.9
5.45 4.66 4.8 7.1 5.3 10.0 7.9 4.0 6.5
7.27 2.57 3.3 5.1 3.0 2.7 8.1 5.0 10.0
s
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Peers Balkrishna Peers Industry
ApolloPeers
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Industry

4.1
6.5
2.8
6.9
4.6
4.8
4.3
2.96
2.7
3.7
5.6
6.7
6.5
3.9
5.6
3.5
 Investment Attractiveness Score
MRF Ceat JK Tyre Apollo Balkrishna Goodyear TVS Srichakra
Sales Growth Hist 10.0 3.4 1.1 0.8 2.4 2.2 6.4
EBIT Growth Hist 9.6 8.6 10.0 3.0 6.1 4.8 7.4
EPS Growth 2.0 10.0 3.6 1.6 1.2 1.0 2.9
Sales Growth Est. 7.5 8.9 9.4 7.5 7.8 9.1 10.0
ROE 7.3 4.4 5.6 2.8 3.9 4.0 10.0
ROCE 8.3 5.0 3.6 3.2 3.2 6.1 10.0
PAT 10.0 2.7 1.7 3.4 2.4 0.5 0.8
EPS 10.0 0.2 0.0 0.0 0.1 0.1 0.5
Volume 0.0 2.7 4.6 10.0 0.4 0.0 0.0
LTD/CF 3.3 4.6 1.3 2.5 3.4 0.0 10.0
Beta 4.5 6.7 10.0 7.5 3.5 6.0 5.5
Volatility 3.2 8.1 10.0 7.4 9.0 7.3 8.7
P/E 1.1 0.0 5.0 4.2 0.0 6.1 1.6
EV/Sales 6.2 6.2 6.8 4.2 0.0 8.1 6.1
EV/EBITDA 5.2 2.9 4.7 0.0 2.1 6.0 3.5
P/B 6.7 4.9 7.0 7.3 1.9 5.0 0.0
Investment
Attractiveness 95.0 79.2 84.6 65.4 47.6 66.5 83.6
Score
Industry
4.1
6.5 Industry
2.8
6.9
4.6
4.8 MRF
4.3 Ceat
Shares

JK Tyre
3.0
Apol lo
2.7 Bal kri s hna
3.7 Goodyea r
5.6 TVS Sri chakra
6.7
3.5 Investment Attractivess
6.1
4.4 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0
6.5

76.1
In Rs. Crores
Sample Year Mar'12 Mar'13 Mar'14 Mar'15 Mar'16
12 Months 12 Months 12 Months 12 Months 12 Months 12 Months
Revenue 100% 10816 12031 12712 13441 13687
EXPENDITURE:
Manufacturing Expenses 4.8% 595 609 632 613 564
Material Consumed 65.3% 7928 8342 8383 8209 7803
Personal Expenses 5.3% 480 559 668 794 860
Selling Expenses 0.4% 233 0 0 0 0
Administrative Expenses 8.5% 520 977 1134 1333 1456
Expenses Capitalised 0.0% 0 0 0 0 0
Provisions Made 0.0% 0 0 0 0 0
Excise Duty 4.2% 464 0 0 759 1526
TOTAL EXPENDITURE 84.4% 9756 10487 10817 10950 10683
Operating Profit 15.1% 1037 1514 1847 2397 2881
EBITDA 15.6% 1060 1544 1895 2492 3005
Depreciation 3.1% 274 337 398 456 492
Other Write-offs 0.0% 0 0 0 0 0
EBIT 12.5% 786 1207 1497 2035 2512
Interest 1.5% 126 177 214 229 228
EBT 11.0% 660 1030 1283 1806 2285
Taxes 3.7% 268 343 433 581 725
Profit for the Year 7.3% 392 687 850 1225 1560
Cash flow from operations (CFO) 650 1223 1554 1979 2283
Interest*(1-t) 86 121 145 156 155
Net Block of Assets
Capital work in Progress
Total Fixed Asstes 3217 3328 3691 4586 5119
FCFF 1232 1336 1239 1906
Terminal Value
 Analysis
Mar'17 Mar'18 Mar'19 Mar'20 Mar'21 Material Cost/Revenue 65.3%
12 Months 12 Months 12 Months 12 Months 12 Months Operating Margin 15.1%
14612 15598.96 16652.67 17777.56 18978.43 Net Profit Margin 7.3%
Capex Rate 12.3%
708 756 807 861 919 CFO Growth Rate 17%
9546 10191 10879 11614 12399
775 828 884 943 1007 Beta 1.1
63 67 72 76 82 Risk Free Rate 6.50%
1239 1323 1413 1508 1610 Market Retun 18.6%
0 0 0 0 0 Risk Premium 12.1%
0 0 0 0 0 Cost of Equity 19.8%
616 658 702 750 800 Cost of Debt 12%
12331 13164 14054 15003 16016 After Tax cost of debt 8.2%
2209 2358 2517 2688 2869 Debt/Equity 0.3
2280 2435 2599 2775 2962 Debt/Value 0.23
452 482 515 550 587 WACC 17.1%
0 0 0 0 0 Long term growth 5.00%
1829 1952 2084 2225 2375
225 240 256 273 292 Value of MRF 28,161.98
1604 1712 1828 1952 2083 Debt 1485
536 573 611 653 697 Equity Value 26,676.98
1068 1140 1217 1299 1387 No of Shares 0.42
2669 3120 3648 4264 4985 Share value 63517
153 163 174 186 198 Actual share Value 69200

5749 6457 7252 8146 9149

2191 2575 3026 3557 4180
36305.39
Ref: Reuters
https://in.investing.com/rates-bonds/india-10-year-bond-yield-historical-data

Annual Report of MRF

MRF Balance sheet

https://www.pwc.in/assets/pdfs/publications/2013/dissecting-indias-risk-equity-premium.pdf

Crore
Crore
Crore
crore
Rs
Rs As on 11th July 2017
Year Open high Low Close Return
2000 1,856.69 2,485.87 1,136.71 1,304.66 -0.29732
2001 1,310.04 1,480.99 1,005.82 -0.23222
2002 1,006.48 1,230.53 999.84 1,176.73 0.169154
2003 1,178.71 2,401.09 1,051.60 2,366.36 1.007585
2004 2,376.01 2,784.18 1,659.74 2,779.65 0.169881
2005 2,791.56 3,806.22 2,534.85 3,795.96 0.359799
2006 3,803.63 5,354.58 3,360.85 5,270.76 0.385718 Market Return 18.6%
2007 5,269.98 8,616.65 4,656.90 8,592.43 0.630448
2008 8,620.10 8,991.42 2,899.28 3,596.85 -0.58274
2009 3,618.00 6,872.18 2,961.26 6,842.25 0.891169
2010 6,839.38 8,434.05 6,280.99 7,961.06 0.164003
2011 7,989.28 8,038.74 5,683.02 5,778.68 -0.2767
2012 5,797.33 7,627.07 5,734.21 7,581.57 0.307769
2013 7,613.36 7,862.72 6,301.27 7,828.34 0.028237
2014 7,850.35 11,089.32 7,320.93 10,721.62 0.365751
2015 10,720.05 11,764.80 9,931.88 10,634.22 -0.00801
2016 10,633.25 12,083.11 9,011.98 11,036.44 0.037918
2017 11,071.08 13,594.60 11,005.66 13,512.45 0.220518
Ref: https://www.pwc.in/assets/pdfs/publications/2013/dissecting-indias-risk-equity-premium.pdf
Year Equity Risk Premium
2000 23.6%
2001 -37.9%
2002 -10.8%
2003 -18.9%
2004 78.9%
2005 10.9%
2006 68.0%
2007 9.3%
2008 13.2%
2009 -44.5%
2010 74.8%
2011 4.2%
2012 -17.3%
Average 11.8%
sk-equity-premium.pdf