What led the MRF share price to touch the 1 lakh mark?

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Chennai based tyre giant MRF achieved a major milestone in its checkered history recently. The MRF stock price became the first stock in the Indian stock market to touch the Rs 1,00,000 mark.

Moreover, the stock has gained 3% in the last month, highlighting the momentum currently being enjoyed by the MRF share price.

So, what were the triggers that led to the rise in MRF share price to this milestone? Does the MRF share really warrant such a high price? What are analysts saying about the MRF share price? Let’s try and decode!

What made MRF share price touch 1 lakh?

Strong Fundamentals: MRF’s solid operational capabilities marked by a stable but consistent rise in revenues has been a key trigger for its share price growth in recent years.

Notably, the sales of MRF has almost doubled in the last 10 years, clocking a CAGR of 6.5%.

The earnings per share (EPS) has also increased from Rs 1,366.16 in 2013 to Rs 1,813.09 in 2023.

Further, the company has been able to maintain its operating margin at early double-digit levels in these 10 years with the same at 10% in March 2023.

Market leader and strong distribution: MRF enjoys a dominant position in the Indian tyre market. This coupled with a solid distribution network has acted as an enabler for the MRF share price.

As of FY 22, MRF had a market share of about 30% in the total industry production and a revenue market share of 22%, highlighting its solid presence in the Indian tyre industry.

Additionally, MRF’s robust distribution network of 5,000 dealers has made it establish a commanding presence in the critical tyre replacement market. Tyre replacement is a major center of profitability for tyre companies and importantly this formed almost 73% of the total revenues for MRF in FY22.

Solid brand: Over the years, MRF has cultivated for itself a very strong brand value. Whether it's through sponsorships on cricket legends’ bats like Sachin Tendulkar or Virat Kohli or through the MRF pace foundation which has produced world class bowlers for the Indian cricket team.

Not only in cricket but the company has made its presence felt in the high-octane world of moto sports too. Notably, it is the only company in India which has developed Formula 1 car tyres. Moreover, MRF also promotes a national Supercross Championship annually in several cities.

These activities have only enhanced its brand image over the years solidifying its position further as a major player in the tyres industry.

Attractive dividend: MRF has consistently paid dividends over the years which have also aided its share price growth over the years and made it an attractive choice for investors.

Notably, its latest dividend payout of Rs 169 per share made it one of the highest dividend paying companies in India.

MRF share price: Analyst target price

MRF is not that popular a stock among the analyst community due to its huge share price and low liquidity. However, some brokers do have a target price for it and they are not that optimistic about the company.

NameTarget PriceUpside Potential
Motilal OswalRs 75,400-24.5%
Kotak Institutional EquitiesRs 66,000-34%
Anand RathiRs 96,000-3.8%

(as of 14th June, 2023)

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.