MRF reported an excellent set of numbers. Its top-line grew by 6.8% yoy to Rs 33.61 billion, above our estimate of Rs 32.81 billion. During the quarter, the company's raw material cost as a percentage of sales surprised positively, declining by 443bp yoy to 59.5%.

Commenting on the result, Angel Broking, said, ''We expect MRF to post a CAGR of 10% in net sales over SY2014-16E to Rs 159.81 billion, while the EBITDA margin is expected to be at 16.3% in SY2016E. Consequently, the net profit is expected to grow at a CAGR of 22.8% over SY2014-16E to Rs 13.53 billion. At the current market price, MRF is trading at a PE of 10.3x its SY2016E earnings and at a P/BV of 2.0x for SY2016E.

We have revised our recommendation on the stock to Buy with a target price of Rs 38,282 based on a target P/E of 12.0x for SY2016E.''

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