India’s Cosliest Stock: MRF shares on Tuesday (June 13) crossed the Rs 1 lakh mark in today’s trading session, becoming the first Indian company to do so in absolute value terms. The stock made an intraday high of Rs 1,00,439 on Tuesday.
The stock had earlier hit the Rs 1 lakh mark in May but in the futures segment.
In the past year, MRF has rallied over 45 per cent. It has gained 81 per cent from the March 2020 low of Rs 55,000. In December 2022, the stock rose to Rs 94,500 but failed to sustain that level.
In India, MRF tops the list of stocks with the highest price tags. Honeywell Automation, whose shares were being sold today at price of Rs 41,152, is the second on the list, followed by the likes of Page Industries, Shree Cement, 3M India, Abbott India, Nestle and Bosch.
A high price tag, however, doesn’t make MRF the most expensive stock in India as investors value securities on metrics like price to earnings (PE) or price to book value (PE).
A stock split can reduce price tags but MRF has never done so. The Chennai-based company has a total of 42,41,143 shares, out of which 30,60,312 shares are owned by public shareholders, representing 72.16% of the total equity. Promoters hold 11,80,831 shares, constituting 27.84% of the total equity.
Q4 Result Push
A spike came after May 3, when the company declared its Q4 results. The tyre maker reported a consolidated profit after tax (PAT) of Rs 313.53 crore for the quarter ended March 31, 2023, up 86 percent year-on-year (YoY). In the same quarter of the previous year, it posted a net profit of Rs 168.53 crore.
Consolidated revenue from operations came in at Rs 5,841.7 crore, up 10.12 percent YoY. The company’s board declared a final dividend of Rs 169 (1,690 percent on the face value of Rs 10 per share).
What Do Analysts Say?
Most analysts have a “sell” rating on the stock because of its high valuations. At a trailing price-to-earnings ratio of 55x, it is the most expensive tyre stock.
“The current forward valuation at 22.3x FY25E earnings per share represents an almost 100 percent premium to its peers, despite a weakening competitive position and similar capital efficiencies,” Motilal Oswal Financial Services has said.
A year back, too, analysts were cautious. There were four “buy” calls, three “hold” and five “sell” calls on the stock and the 12-month target price was around Rs 70,800. The stock, however, has managed to cross the Rs 1 lakh mark.
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “MRF, one of the leading stocks in the Indian stock market, has made history by becoming the first 6-digit stock after surpassing the impressive milestone of 1 lakh. The technical chart analysis indicates that there is further potential for growth, as we can observe a breakout pattern known as a classical flag formation. This pattern suggests that the stock’s upward momentum is likely to continue, with a potential target of around 1,10,000. It’s important to note that even if there are temporary pullbacks, the previous breakout level of 95,000 is expected to provide strong support and act as a solid foundation for the stock.”
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