MRF - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.6
| Stock Code | MRF | Market Cap | 57,688 Cr. | Current Price | 1,36,000 ₹ | High / Low | 1,63,600 ₹ |
| Stock P/E | 32.0 | Book Value | 45,019 ₹ | Dividend Yield | 0.17 % | ROCE | 13.8 % |
| ROE | 10.5 % | Face Value | 10.0 ₹ | DMA 50 | 1,45,691 ₹ | DMA 200 | 1,44,464 ₹ |
| Chg in FII Hold | -0.09 % | Chg in DII Hold | 0.12 % | PAT Qtr | 512 Cr. | PAT Prev Qtr | 484 Cr. |
| RSI | 38.0 | MACD | -4,570 | Volume | 6,237 | Avg Vol 1Wk | 8,522 |
| Low price | 1,00,500 ₹ | High price | 1,63,600 ₹ | PEG Ratio | 0.63 | Debt to equity | 0.11 |
| 52w Index | 56.3 % | Qtr Profit Var | 12.3 % | EPS | 4,245 ₹ | Industry PE | 29.7 |
📊 Analysis: MRF trades at ₹1,36,000 with a P/E of 32.0, slightly above the industry average of 29.7, suggesting fair valuation but not cheap. ROE (10.5%) and ROCE (13.8%) are moderate, reflecting average efficiency in generating returns. Dividend yield is negligible at 0.17%, making it unattractive for income investors. The PEG ratio (0.63) indicates reasonable growth potential relative to valuation. Technical indicators (RSI 38.0, MACD -4,570) show bearish momentum, suggesting near-term weakness. PAT has improved sequentially (484 Cr. → 512 Cr.), showing steady earnings growth. Debt-to-equity at 0.11 highlights a strong balance sheet.
💡 Entry Price Zone: Ideal entry would be between ₹1,20,000–₹1,28,000, closer to the 52-week low (₹1,00,500) and below DMA 200 (₹1,44,464), offering better valuation comfort.
📈 Exit / Holding Strategy: If already holding, consider a medium-to-long horizon (3–5 years) given steady earnings and sector resilience. Exit strategy should be triggered if price sustains below ₹1,20,000 or if ROE/ROCE stagnate. Otherwise, continue holding for compounding returns with periodic monitoring of profitability.
✅ Positive
- Strong EPS at ₹4,245, reflecting solid earnings power.
- Debt-to-equity ratio at 0.11, showing low leverage.
- Sequential PAT growth (484 Cr. → 512 Cr.).
- DII holdings increased (+0.12%), showing domestic institutional confidence.
⚠️ Limitation
- P/E of 32.0 vs industry average of 29.7, indicating slight overvaluation.
- Dividend yield at 0.17%, unattractive for income investors.
- Moderate ROE (10.5%) and ROCE (13.8%), not very high compared to peers.
📉 Company Negative News
- FII holdings reduced (-0.09%), showing declining foreign investor interest.
- Stock trading below DMA 200, reflecting weak medium-term momentum.
📈 Company Positive News
- Quarterly profit growth of 12.3% variation.
- Stock trading well above 52-week low (₹1,00,500), showing resilience.
🏭 Industry
- Tyre and automotive sector has cyclical growth tied to auto demand and infrastructure expansion.
- Industry P/E at 29.7 highlights MRF is trading at a slight premium compared to peers.
🔎 Conclusion
MRF shows steady earnings growth and strong balance sheet but trades at a slight premium with modest return metrics and negligible dividend yield. It is a fair candidate for long-term investment if accumulated near ₹1,20,000–₹1,28,000. Existing holders should continue holding for 3–5 years unless fundamentals weaken or price drops below ₹1,20,000.