The MRF stock has experienced an impressive rally over the past year, witnessing a surge of over 45 percent and an 81 percent increase from its lowest point in March 2020, which was Rs 55,000.
As of 9:25 am, the stock was trading at Rs 1,00,050 on the NSE, surpassing the Rs 1 lakh milestone. It had previously reached the Rs 1 lakh mark in May, but that was in the futures segment.
Over the past year, MRF has showcased strong performance, with a rally of over 45 percent. It even reached Rs 94,500 in December 2022, but failed to maintain that level.
Boosted by Q4 Results
The significant spike in MRF’s share price came after the company announced its Q4 results on May 3. The tire manufacturer reported a consolidated profit after tax (PAT) of Rs 313.53 crore for the quarter ending on March 31, 2023, marking an 86 percent YoY increase. In the same quarter of the previous year, the net profit stood at Rs 168.53 crore.
Consolidated revenue from operations amounted to Rs 5,841.7 crore, indicating a YoY growth of 10.12 percent. MRF’s board also declared a final dividend of Rs 169 (1,690 percent on the face value of Rs 10 per share).
Analysts’ Opinions Vary
According to Bloomberg, analysts have provided one “buy” call, two “hold” calls, and eight “sell” calls for MRF’s stock. The 12-month target price for the stock is estimated at Rs 84,047, implying a 16 percent decline from the current level.
Many analysts have assigned a “sell” rating to the stock due to its high valuations. With a trailing price-to-earnings ratio of 55x, MRF is considered the most expensive tire stock.
Motilal Oswal Financial Services stated, “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.”
Even a year ago, analysts exercised caution, with four “buy” calls, three “hold” calls, and five “sell” calls on the stock, and a 12-month target price of approximately Rs 70,800. However, despite the initial skepticism, MRF managed to surpass the Rs 1 lakh mark.
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