Why MRF Share Price is High | 5 Reasons Why It Is Most Expensive? (2024)
In the past 5 years, that is starting financial 2017, the MRF share price has escalated by more than 47%, and has reached its all-time peak price of ₹ 96,973/- in Feb 2021. So an interesting point to ponder, why is MRF share price is so high and even then manages to keep rising?
It is vital to find the reasons behind this phenomenon as MRF shares already lead the most expensive stocks on the exchanges list. Let’s understand this massive pricing and ever-increasing graph of MRF by a simple example.
Suppose an investor invested ₹ 10,000 in MRF 10 years back stock, then they would have made a profit of more than 900%, effectively turning the invested amount into more than ₹ 90,000.
This typically indicates that there is a steady growth in MRF and its investors have not felt discouraged by the increasing share price over the years. This is truly a unique stock and the curiosity around, why MRF share price is so high, is justified.
Let’s go into the details of why MRF share price is one of the costliest shares in the Indian stock market?
MRF or Madras Rubber Factory went public in 1961 with the face value of Rs 10. Since then the company is able to give a return of as high as 1100% to its investors in the past 11 years.
But why its share price is so high?
Above all, is it a good idea to invest in MRF shares now?
Let’s find out the primary reason of what is the major reason for the highest price of the share in India.
Stock split effectively increases the number of shares that are up for trading (free-float) by splitting the existing shares into a factor or ratio that management decides.
Considering the example of stock split, the ABC company the share price which is Rs 5000 per share announces a stock split in 10:1 this means that now the stock price would be Rs 500, and the number of shares increases by the multiple of 10.
So here the investor having 50 shares of ABC company would now have a total of 500 shares in the demat account.
And with a stock split, the price per share also dips without affecting the overall market capitalization.
Most of the blue-chip companies would be costliest if they have not split their shares ever. Considering the example of Infosys, the current CMP of the share is around 1800/ share would be around 6.04 crores now.
The company was listed in 1993 and has split its stock 7 times since 1997. This increases the number of shares, affecting its face value but providing value to investors who are willing to invest and earn high returns.
MRF Stock Data
Scrip
Market Capitalisation
Current Share Price
Last Stock Split
Infosys (INFY)
₹ 7,91,219 cr
₹ 1885
Jan 2000
MRF Limited (MRF)
₹ 30,374 cr
₹ 72,450
Never
Now, unlike Infosys or many more companies, MRF has never implemented a stock split, thus it is one of the reasons that MRF share price is so high.
But why MRF has not implemented a stock split is another critical question. Although these are managerial strategic decisions, they still can be critiqued upon.
So here we are with some of the major reasons why MRF has not split its shares ever:
Good Performance: Stock price whether it was₹20,000 a few years back or₹80,000 at present has attracted serious and potential investors toward it. Now think of the time, when its price was 20k, no doubt it was expensive at that time as well but still investors who had invested in it earned a potential gain and returns years later. In all, it is growing continuously and providing growth benefits to its investors since the time of listing.
Want to Keep Speculators Away: With a stock split, the share price of the company decreases which attracts more speculators thus increasing the volatility. By not choosing to split shares, companies like MRF are able to keep such speculators away from their shares. This makes the stock more stable and available only for serious investors in the market.
To Stay Unique: Not only its product, but its share price is something that brings uniqueness to the company and helps it to gain the attention of investors who want to stay and invest seriously in the share market.
Limited Public Shareholdings: Other than this, although the shares of the company are listed and thus available for the public i.e. retail investors, with high share price (due to non-splitting) only gives its hold and voting rights to limited investors in the market. Thus when it comes to making a specific decision, most of the power stays in the hand of the promoters of the company.
No Financial Benefits: Last but not the least, splitting of stock does not give any financial benefit to the company and thus the company stays away from making such decisions.
Conclusion
MRF share price is high and the reason is clear. So, if you are one who is looking forward to making a stable and long-term investment in the company, then choosing a company like MRF for investment can help you in achieving your financial goals.
Want to begin your journey in the share market, start now. Get in touch with us and we will help you in opening a demat account with the renowned stockbroker online for FREE!
The company was listed in 1993 and has split its stock 7 times since 1997. This increases the number of shares, affecting its face value but providing value to investors who are willing to invest and earn high returns.
MRF currently has the highest share price in India among all the companies listed on BSE/NSE. The all-time high share price of MRF is Rs. 98,599. The stock is currently trading at a PE of 63.60.
If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall. Understanding supply and demand is easy.
It also helps in earning a good profit. Investors' rising expectations for future profits growth are reflected in the company's rising share prices. The company's worth rises as it invests in itself, enabling it to generate more revenue. This potential will entice investors.
This business in no time became very popular, it was the only Indian company that manufactured the tread rubber, and competitors were foreign companies. Thus, MRF was on the road to the big league, and within 4 years, it became the owner of a 50% market share owing to its high quality.
Berkshire Hathaway, the conglomerate headed by legendary investor Warren Buffett, has the most expensive stock in the world, with shares trading at over $400,000 each. Berkshire Hathaway's market capitalisation is over $640 billion, making it one of the giant companies in the world.
What is the most expensive stock in the world? As of 17th January 2022, Berkshire Hathaway is the most expensive stock in the world, trading at $4,81,258.03 per share. The American-holding company serves as an investment vehicle for Warren Buffett.
MRF Ltd or Madras Rubber Factory Ltd is the most expensive share in India with a price of ₹98,614.05. When MRF had its IPO in 1990, the share price was ₹ 11, and it crossed the mark of ₹ 98,614.05 per share in 2023.
High-priced stocks are relatively less volatile than low-priced ones, meaning their prices usually do not rise or fall significantly in a short period. As investors often consider high-priced stocks to keep for the long term, a significant price fluctuation in the short term is rare in such stocks.
Minimize volatility: By nature, a stock that's trading at a higher volume may be less volatile. This means you're less likely to see huge swings in pricing over the course of a trading day. That can lower your risk factor since larger numbers of investors pour money into the stocks.
“US stocks always trade at a premium to other developed markets,” says Felix Wintle, North American Fund manager at VT Tyndall. “The US has much higher growth. If you boil it down, equity valuations come down to growth. The more growth, the higher the valuation.
This is because a company's share price is linked to its earnings and thus a strong share price reflects strong earnings potential. As such, a strong share price over the long term is a good indication of the company's ability to meet debt requirements.
A higher market share usually means greater sales, lesser effort to sell more and a strong barrier to entry for other competitors. A higher market share also means that if the market expands, the leader gains more than the others.
View 4 reports from 1 analysts offering long term price targets for MRF Ltd.. MRF Ltd. has an average target of 75400.00. The consensus estimate represents a downside of -23.54% from the last price of 98614.05.
Berkshire Hathaway is billionaire value investing legend Warren Buffett's multinational conglomerate holding company. Berkshire has a massive public and private investment portfolio that includes stocks such as Apple (AAPL), Bank of America (BAC) and Chevron (CVX).
'Billionaire Stocks': Bill Gates, Berkshire Hathaway (BRK.B)
The natural stock pick held by the world's wealthiest person is Microsoft (NASDAQ:MSFT), the giant tech company Bill Gates co-founded with Paul Allen in 1975. Gates still owns almost 103 million shares of the company worth $15.4 billion.
Rakesh Jhunjhunwala –Rakesh Jhunjhunwala is popularly known as Share Market King of India. In India, he was known as "The Big Bull" of the stock market and was one of the best investors in the country of all time.
First, you can make money by investing in these companies because the prices of their stocks keep increasing over time. ... Top Stocks Under Rs 20 in 2023.
(MRF) shares by opening a Demat account with Angel One. Indirect investment: The indirect method involves investing through ETFs and Mutual Funds that offer exposure to MRF LTD.
When the price of shares are low, you must buy the shares. Of course, there's a chance that prices will dip further. However, this is a safer bet than buying at high prices when the stock seems unlikely to climb further in value.
Once a company goes public and its shares start trading on a stock exchange, its share price is determined by supply and demand in the market. If there is a high demand for its shares, the price will increase. If the company's future growth potential looks dubious, sellers of the stock can drive down its price.
A stock is thought to be overvalued when its current price doesn't line up with its P/E ratio or earnings forecast. If a stock's price is 50 times earnings, for instance, it's likely to be overvalued compared to one that's trading for 10 times earnings.
A weak Dollar is less of a drag on the technology sector, which generates a lot of revenue overseas. Interest in foreign stocks may rise as the Dollar loses its luster.
One possible explanation for this relationship is foreign investment. As more investors place their money in U.S. equities, they are required to first buy U.S. dollars to purchase American stocks, causing the indexes to increase in value.
The primary reason that investors own stock is to earn a return on their investment. That return generally comes in two possible ways: The stock's price appreciates, which means it goes up. You can then sell the stock for a profit if you'd like.
An investment of Rs 10,000 in this counter in June 1993 would have delivered you 2,973 times return! That Rs 10,000 investment would now have been worth Rs 2.97 crore at a compounded annual growth rate (CAGR) of 39 per cent.
It has broken a strong resistance of 91746 and is expected to move up further. ... Stock price target for MRF Limited MRF are 96557.03 on downside and 101031.68 on upside.
As of 17th January 2023, MRF Ltd is the most expensive stock in India, trading at Rs. 89,228.35. The company is a leading tyre manufacturer in India, producing a wide range of tyres.
MRF Tyres's competitors and similar companies include Apollo Tyres, Continental Tire the Americas, Akebono Brake Industry and ATC Tires. MRF Tyres (Madras Rubber Factory) is a company manufacturing tires.
In the years 1970 and 1975, MRF offered a share split of 1:2 and 3:10 respectively. Since 1975, there have been no share splits offered. Here are 5 potential reasons as to why MRF won't split its shares.
Consumer Cyclical stocks do not always pay a dividend but as MRF Ltd pays dividends to reward its shareholders. In the quarter ending March 2023, MRF Ltd has declared dividend of ₹3 - translating a dividend yield of 0.16%.
In 2023, with our research and forecast system, the lowest share price target would be Rs 84,550.50 to Rs 92,000.20. And the maximum target price for MRF shares may reach Rs 94,250.20 to Rs 98,250.30 at the end of the year.
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