MRF - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | MRF | Market Cap | 56,107 Cr. | Current Price | 1,32,295 ₹ | High / Low | 1,63,600 ₹ |
| Stock P/E | 31.2 | Book Value | 45,019 ₹ | Dividend Yield | 0.18 % | ROCE | 13.8 % |
| ROE | 10.5 % | Face Value | 10.0 ₹ | DMA 50 | 1,46,562 ₹ | DMA 200 | 1,44,650 ₹ |
| Chg in FII Hold | -0.09 % | Chg in DII Hold | 0.12 % | PAT Qtr | 512 Cr. | PAT Prev Qtr | 484 Cr. |
| RSI | 24.2 | MACD | -4,949 | Volume | 3,503 | Avg Vol 1Wk | 9,245 |
| Low price | 1,00,500 ₹ | High price | 1,63,600 ₹ | PEG Ratio | 0.61 | Debt to equity | 0.11 |
| 52w Index | 50.4 % | Qtr Profit Var | 12.3 % | EPS | 4,245 ₹ | Industry PE | 28.3 |
📊 Financials: MRF has a market cap of 56,107 Cr. with quarterly PAT at 512 Cr., up from 484 Cr. (12.3% growth). ROE at 10.5% and ROCE at 13.8% indicate moderate efficiency. Debt-to-equity ratio of 0.11 shows low leverage. EPS is strong at 4,245 ₹, reflecting solid profitability. Cash flows remain stable, supported by consistent demand in the automotive sector.
💹 Valuation: Current P/E of 31.2 is slightly above the industry average of 28.3, suggesting mild overvaluation. P/B ratio is ~2.94 (1,32,295 ₹ / 45,019 ₹), which is reasonable for a premium brand. PEG ratio of 0.61 indicates earnings growth is fairly priced. Intrinsic value appears close to current levels, making the stock moderately attractive for long-term investors.
🏭 Business Model & Competitive Advantage: MRF is India’s leading tire manufacturer with strong brand equity, wide distribution, and dominance in both OEM and replacement markets. Its competitive advantage lies in scale, brand recognition, and diversified product portfolio. However, profitability is sensitive to raw material costs (rubber, crude derivatives) and cyclical demand in the auto sector.
📈 Entry Zone: With RSI at 24.2 (oversold territory) and support near 1,00,500–1,10,000 ₹ (close to 52-week low), accumulation in this zone is favorable. Current price at 1,32,295 ₹ is above ideal entry but could be considered for gradual accumulation.
🕰️ Long-Term Holding Guidance: MRF is fundamentally strong with brand dominance and steady demand drivers. Long-term holding is recommended, though investors should be mindful of cyclical risks and raw material price volatility.
Positive
- Strong EPS (4,245 ₹) and profitability.
- Low debt-to-equity ratio (0.11).
- Quarterly PAT growth of 12.3%.
- DII holdings increased by 0.12%, showing domestic investor confidence.
Limitation
- P/E (31.2) slightly above industry average (28.3).
- ROE (10.5%) and ROCE (13.8%) are moderate compared to peers.
- FII holdings decreased by 0.09%, showing reduced foreign confidence.
- Stock trading below DMA 50 and DMA 200, indicating weak momentum.
Company Negative News
- Weak technical momentum with RSI at 24.2.
- Dependence on raw material costs impacting margins.
Company Positive News
- Quarterly PAT improved from 484 Cr. to 512 Cr.
- Strong brand equity and market leadership in tires.
Industry
- Automotive sector demand drives tire industry growth.
- Industry P/E at 28.3 highlights MRF’s fair valuation relative to peers.
Conclusion
⚖️ MRF is a fundamentally strong company with brand dominance and steady demand drivers. Entry around 1,00,500–1,10,000 ₹ is favorable, and long-term holding is recommended, though investors should remain cautious of cyclical risks and raw material price fluctuations.