NEW DELHI: Shares of top tyre maker MRF made history on Tuesday by becoming the first stock to trade in six-digit figures. After gaining over 20% in last two-and-half months, the share touched an intraday high of Rs 100,300 on Tuesday before settling at Rs 99,950.65 apiece on the BSE.
While the scrip has achieved this feat, it is neither the most expensive stock on the exchanges nor has it given the best 1-year return among its peers. However, the return given by tyre makers over a 5-year period has not been that impressive.
The high value of a single share can be attributed to the management’s decision to never go for a stock split or bonus issue, unlike most blue-chip stocks. A stock’s price tag doesn’t indicate whether it’s cheap or expensive as the value depends on several factors like market capitalisation, price-to-earnings (P/E) ratio, earnings, and growth prospects.
MRF shares have given an impressive return of 47% in the last one year while share of Ceat has gained about 120%, Apollo Tyres 119%, JK Tyres 85% and TVS Srichakra 80% during the period. Nifty and Sensex have gained about 19-20% in one year.
Being valued at Rs 42,400 crore, MRF’s current market capitalisation is only next to Balkrishna Industries (current valuation of Rs 44,800 crore). The rally in tyre shares is attributed to automobile sales going up and the replacement segment growing at a stable pace.
