Patience is key to high returns on investment and this holds true for investors in MRF shares. The stock market investors who remained invested in MRF shares since its listing on the domestic bourses have turned multi-millionaires.
MRF, the country’s largest tyre manufacturer, which debuted on the Indian stock exchange in April 1993, has delivered more than 6,00,000% returns to investors in the last 28 years. The stock made its debut on the BSE on April 27, 1993, with a face value of ₹10 per share.
On April 27, 1993, MRF stock ended at ₹11 compared with the current price of 66,853 (intraday today) on the BSE, logging a growth of 6,07,654%. The stock hit its lifetime high of ₹94,000 on February 24, 2021.
If you had invested ₹1 lakh in this largecap stock at ₹11 apiece 28 years ago, it would have turned out to be around ₹61 crore at present.
MRF is the most expensive stock in the Indian equity market among all the companies listed on BSE and NSE. This is because MRF has never split its stock, which is very uncommon among listed companies. Companies split their shares from time to time to maintain liquidity and increase investors’ base.
With a market capitalisation of ₹27,922 crore, MRF (earlier known as Madras Rubber Factory) has delivered robust returns to its long term investors. It has given 600% return in 20 years and 590% over a ten-year period. However, it has disappointed short-term investors by generating negative returns of 25% over the past one year and 14% in the last six months. In the past one week, it has fallen 9%.
On Wednesday, the stock opened higher at ₹66,299 against previous close price of ₹65,779 and gained as much as 1.6% during the session. The stock was trading 29% lower than 52-week high of ₹94,000.
MRF shares have been trading higher than 5-day moving averages, but lower than 20-day, 50-day, 100-day, and 200-day moving averages. The stock has turned ‘bearish’ from ‘mildly bearish’ on January 20, 2022, at ₹73,787.
Tyre stocks had been under stress in recent past due to rising raw material costs and regulatory action. Earlier this month, Competition Commission of India (CCI) slapped a collective fine of over ₹1,788 crore on five tyre companies for indulging in alleged cartelisation. These five tyre companies include MRF, CEAT, Apollo Tyres, JK Tyre & Industries, and Birla Tyres. The fair trade regulator alleged that the tyre manufactures exchanged price-sensitive data amongst themselves and took collective decisions on the prices of tyres.
For the third quarter ended December 31, 2021, the tyre major reported 71% fall in net profit to ₹149 crore, from ₹521 crore during the same period last year. Revenue from operations rose 6% to ₹4,920 crore, from ₹4,642 crore during the corresponding period last financial year.
During the 9-month period ended December 31, 2021, the company posted profit of ₹504 crore as compared to ₹945 crore in the same period last year, registering a drop of 46.6%. The total income rose by 24% to ₹14,263 crore as compared to ₹11,499 crore during the 9-month period ended December 31, 2020.
