On Tuesday, MRF, a maker of tyres, set a new record on Dalal Street when it became the first stock to surpass the Rs 1 lakh threshold. On the BSE, MRF shares increased 1.37% to a new 52-week high of Rs 100,300.
MRF had come close to reaching the Rs 100,000 threshold in the spot market earlier in May by just Rs 66.50, but on May 8, it crossed the psychologically significant figure.
MRF is the stock with the highest price tag in India.The second company on the list is Honeywell Automation, whose shares were sold today for Rs 41,152.
Although MRF has a high price tag, investors don’t view it as the most expensive company in India because of criteria like price to earnings (PE) and price to book value (PE).
MRF shares were trading at a PE of 55.2 times earnings over the last twelve months. Retail investors frequently mistake the company’s price for its valuation and label MRF as the most expensive stock as a result.
Although a stock split can lower prices, MRF has never done one. There are 42,41,143 shares outstanding in the Chennai-based business, of which 30,60,312 are held by public shareholders, accounting for 72.16% of the total equity. 11,80,831 shares, or 27.84% of the stock, are held by the promoters.
A high purchase price frequently deters regular investors from grabbing the shares. At the end of the March quarter, retail ownership in MRF, as measured by individuals with investments under Rs 2 lakh, was 12.73%. The stock is held by about 40,000 small investors in total.
The stock, which has risen more than 20% in the previous three months and has a market capitalization of almost Rs 42,500 crore.
Fundamental Perspective According to Trendlyne statistics, sell ratings have been provided by 5 of the 7 analysts that cover MRF.
MRF bears Kotak Institutional Equities and Motilal Oswal previously set goals on the stock of Rs. 75,400 and Rs. 66,000, respectively.
“Over the past several years, MRF’s competitive standing within the industry has deteriorated, which is also evident in the erosion of pricing power in the PCR and TBR categories. This should result in a small growth in return ratios, together with the impact of the upcoming capex, Motilal had stated last month.
The stock of MRF indicates little upside from the present market price, according to brokerage company Anand Rathi, which has suggested a ‘hold’ rating with a target of Rs 96,000.
“Replacement demand for MRF would progressively increase as economic activity increased and the high base’s effects diminished. When OEM demand is in the upper single digits, it is good. Over FY23–25, we anticipate a 6% increase in volume. Since the majority of the benefits of lower input costs have already been accounted for, EBITDA margins will remain constant starting in Q4, it added.
