MRF shares drive past the ₹60,000 mark intra-day

Shares of Chennai-headquartered tyre major MRF Tyres rolled past ₹60,000 a piece for the first time on the BSE during afternoon trade on Monday.

However, the tyre major’s scrip, with a face value ₹10, closed the day at ₹59,905, up 1.22 per cent over the previous close.

With its new all-time high, MRF is the costliest share traded in the Indian stock market. Yet, it is not the most expensive tyre stock from a valuation perspective.

With strong fundamentals, shares of MRF have continued to soar over the past five-six years — from ₹6,324 on March 29, 2011, to ₹50,000 in September 2016.

The surge comes at a time when the government is expected to discuss anti-dumping duty on import of radial tyres in certain categories.

The market rally of 2012 can perhaps be identified as the starting point for the rise that the MRF stock has seen till date. Barring intermittent periods of volatility since then, the stock has managed a steady ascent despite the cyclical nature of sales in its user industry — the auto sector— and the fall or rise in the prices of rubber — the key raw material for tyres.

MRF today trades at a valuation (price to earnings ratio) of 16.5 times its trailing 12-month standalone earnings. Peer Balkrishna Industries trades at a higher 18.6 times. At 13.5 times, Ceat, too, trades only at a narrow discount to MRF.

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