MRF share price at ₹1 lakh: An investment of ₹1 lakh 20 years ago would have turned into ₹85 lakh today

MRF stock would have given you hefty returns if you had invested in this stock 20 years ago. The shares of MRF have risen from ₹1,175 on June 13, 2003, to an all-time high of ₹1,00,300 on June 13, 2023, representing a multibagger return of 8,436 per cent over the past 20 years. This means if you had invested ₹1,00,000 in MRF 20 years ago, your investment would have risen to ₹85.36 lakh by now.

MRF became the first Indian stock to touch the rupee one lakh per share mark on Tuesday (June 13). MRF shares hit their 52-week low of ₹65,900.05 on BSE on June 17, 2022. As of the closing of the previous session, the stock is up 50 per cent from that level.

Read more: MRF becomes the first Indian stock to touch ₹1 lakh per share mark

If we see the last 10 years' data, the stock has outperformed the benchmark Sensex seven times. The stock underperformed the Sensex from 2018 to 2021. For the year 2023 so far, MRF shares are up about 12 per cent against a 4 per cent gain in the benchmark Sensex.

The current market capitalisation of the stock is near ₹42,000 crore and the latest shareholding data shows, promoters have decreased holdings in the company from 27.87 per cent in December 2022 quarter to 27.84 per cent in March 2023 quarter.

Should you buy the stock?

MRF is a pricey stock but that does not mean it is expensive on the valuation front also. A stock's price tag doesn't indicate whether it's cheap or expensive. MRF's current price-to-earnings ratio (PE) is at 51 which is still below its trailing 12-month price-to-earnings ratio of 55.

Sonam Srivastava, Founder at Wright Research pointed out that a stock's price tag doesn't indicate whether it's cheap or expensive as the value of a stock depends on several factors like market capitalisation, price-to-earnings ratio, earnings, and growth prospects.

Market capitalisation 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," said Srivastava.

Analysts say one can consider buying this stock for the long term only if he/she can afford it. 

Gaurav Bissa, VP at InCred Equities observed MRF has witnessed a strong upside in the last few months with continued outperformance against broader market indices.

"The stock is currently forming a bullish flag pattern on the weekly charts which is a continuation pattern in nature. It had earlier given a breakout retest from a triangle pattern of ₹95,000 level followed by some consolidation. A close above ₹1 lakh will confirm a bullish flag breakout which can push it towards ₹1,15,000 levels. The stock is showing an equally interesting setup on point and figure charts," said Bissa.

"The stock has seen follow-through of bullish ABC pattern breakout on 0.25x3 daily time frame. The cluster target comes around ₹1,15,000 on point and figure charts which coincides with the bullish flag and triangle pattern targets," said Bissa.

Santosh Meena, Head of Research at Swastika Investmart pointed out that the technical chart analysis of MRF indicates further potential for growth, as there is a breakout pattern known as a classical flag formation.

"This pattern suggests that the stock's upward momentum is likely to continue, with a potential target of around ₹1,10,000. It is important to note that even if there are temporary pullbacks, the previous breakout level of ₹95,000 is expected to provide strong support and act as a solid foundation for the stock," said Meena.

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Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.