On Tuesday, MRF, the renowned tyre manufacturer, made history on Dalal Street by becoming the first stock to cross the significant Rs 1 lakh mark. The share price of MRF experienced a surge of 1.37%, reaching a new 52-week high of Rs 100,300 on the BSE exchange.
Although in May, MRF fell just short of reaching the Rs 100,000 mark in the spot market, it successfully surpassed this psychologically important level in the futures market on May 8. In terms of stock prices in India, MRF currently holds the top position with the highest price tags. Honeywell Automation, whose shares were being traded at Rs 41,152, secures the second position on the list, followed by companies like Page Industries, Shree Cement, 3M India, Abbott India, Nestle, and Bosch.
However, it’s important to note that having a high price tag doesn’t necessarily make MRF the most expensive stock in India. Investors typically assess the value of securities based on metrics such as price-to-earnings (PE) or price-to-book value (PE). When considering the trailing 12-month basis, MRF shares were found to be trading at a PE ratio of 55.2 times earnings. Retail investors often mistake the stock’s price for its valuation and tend to label MRF as the most expensive stock.
While a stock split can reduce the share price, MRF has never undertaken such an action. The Chennai-based company currently has a total of 42,41,143 shares, out of which 30,60,312 shares are owned by public shareholders, representing 72.16% of the total equity. The remaining 11,80,831 shares, constituting 27.84% of the total equity, are held by the promoters.
The high ticket price of MRF shares sometimes deters retail investors from investing in the stock. As of the end of the March quarter, retail shareholding in MRF, defined as investments below Rs 2 lakh, accounted for 12.73% of the total shares. Overall, approximately 40,000 small investors own MRF shares.
Over the past three months, MRF, with a market capitalization of around Rs 42,500 crore, has experienced a significant rally of over 20%.