Tyre manufacturer and India's most expensive stock, MRF, became the first Indian company to cross ₹1,00,000 per share, its highest-ever level.
The stock rose as much as 1.5 percent to its intra-day high of ₹100,439.95 on NSE. In the last 3 sessions, it gained around 3.5 percent.
The stock has jumped over 41 percent in the last 1 year and around 14 percent in 2023 YTD. It rose nearly 3 percent in June so far after a 9.2 percent gain in May and a 5.9 percent rise in April. However, it shed 1.4 percent and 6.2 percent in March and Feb, respectively. In Jan, the stock added 2.6 percent.
The stock jumped 900 percent in a little more than 11 years to surge from ₹10,000 to over ₹1 lakh. After hitting its ₹90,000 mark in 2021, the stock gained ₹10,000 in just 2 years.
In the March quarter, MRF posted a whopping 162 percent jump in its net profit at ₹410.66 crore versus ₹157 crore in the year-ago period. Meanwhile, its revenue from operations rose 10.1 percent YoY to ₹5,725.39 crore in the quarter under review versus ₹5,304.8 crore.
However, on the back of such expensive valuations, most brokerages remain bearish on the stock.
Brokerage houses Motilal Oswal, as well as Kotak Securities, have a ‘sell’ rating on MRF. While MOSL has a target of ₹75,000 for the stock, Kotak has a target of ₹66,000, indicating huge downsides.
MOSL believes that the company's competitive positioning has weakened within the sector within the past few years, which is also reflected in the dilution of pricing power.
Meanwhile, Sonam Srivastava- Founder at Wright Research an investment advisory firm said, "A stock's price tag doesn't indicate whether it's cheap or expensive. The value of a stock depends on several factors like market capitalization, price-to-earnings (P/E) ratio, earnings, and growth prospects. Market capitalization considers a company's total value by multiplying its stock price by outstanding shares. The P/E ratio compares a company's share price to its per-share earnings, indicating its expected growth or lack thereof. A stock with a high price may be justified by strong earnings and future growth prospects. Conversely, penny stocks, despite their low price, can be "expensive" due to their high risk. They're often less established, prone to price manipulation, and have large bid-ask spreads, making them costly to trade. Therefore, it's crucial to research and evaluate a company's underlying value and future prospects before investing."
