MRF Share Price Target 2024, 2025, 2026, 2028 ,2030

MRF Limited is a leading Indian tire manufacturing company headquartered in Chennai, Tamil Nadu. Founded in 1946 as a toy balloon manufacturing unit by K.M. Mammen Mappillai, MRF started manufacturing tread rubber in 1952 and eventually tyres in the 1960s. Today, MRF is the largest tire manufacturer in India with presence across segments like passenger vehicles, commercial vehicles, farm equipment, aircrafts etc. As of September 2023, MRF has a market capitalization of Rs 58,043 crores.

Significance of Share Price Monitoring

Monitoring MRF’s share price and valuation is important for investors to ascertain the company’s financial health, growth prospects and market position. Share price analysis also indicates market sentiment towards the company and the tire industry. With tire demand closely linked to automobile sales, MRF’s share price trends can offer insights into the broader automotive market. Overall, continuous share price tracking helps investors make informed investment decisions about MRF.

MRF Limited Company Overview

Historical Evolution

  • 1946: Started as a toy balloon manufacturing unit in Madras by K.M. Mammen Mappillai
  • 1952: Ventured into tread rubber manufacturing
  • 1960: Incorporated as a private limited company, MRF Limited
  • 1961: Entered technical collaboration with Mansfield Tire & Rubber Co., USA
  • 1964: Established first international office in Beirut for tyre exports
  • 1967: Exported tyres to the USA for the first time
  • 1970: Opened 2nd manufacturing plant in Kottayam, Kerala
  • 1971: Commissioned 3rd plant in Goa
  • 1978: Launched Superlug truck tyres, which became top selling
  • 1996: Opened first plant dedicated to radial tyres in Puducherry
  • 2013: Supplied tyres to Sukhoi fighter jets, the first Indian company to achieve this
  • 2016: Crossed $5 billion in revenues
  • Today: 10 plants across India, among Top 20 global tyre manufacturers

Financial Indicators

Revenue Growth (YoY): 18.9% (Q2 FY2024)

Profit Growth (YoY): 26.09% (FY2023)

Net Profit Margin: 11.63% (FY2023)

ROE: 5.77% (FY2023)

ROCE: 8.83% (FY2023)

Market Share: ~25% of Indian tyre industry

MRF has charted a steady growth in revenues and profits over the past decade, despite fluctuations in the auto industry. Its net profit margin is higher than competitors like CEAT and JK Tyres. However, ROE and ROCE have weakened compared to 5 years ago. MRF retains market leadership with over 25% share of the Indian tyre industry.

MRF share price historical movement

MRF share price target historical movement
MRF share price target historical movement

Recent Developments

Financials:

  • Board meeting scheduled for February 9, 2024, to discuss unaudited Q3 and 9M FY24 results and potential dividend declaration.
  • Interim dividend of Rs. 3 per share (30%) already declared for FY24 with record date on November 17, 2023.

Operations:

  • Loss of share certificates reported on multiple occasions.
  • Entered into power purchase agreements with First Energy 6 and 8 Private Limited for renewable energy procurement.

Product Launches:

  • Launched fuel-efficient Ezeeride range of bike tyres in May 2022.
  • Expanded capacity at multiple plants to meet demand in March 2022.
  • Launched Smart Tyre range for trucks and buses in February 2022.
  • Launched new generation SUV tyres under Perfinza brand in August 2021.

Partnerships:

  • Partnered with Blackstone Group to acquire Manav Rubber products in January 2022.

MRF continues to expand production capacities and launch new products, aiming to tap into growing segments like SUVs and fuel efficient tyres. Acquisitions and partnerships are focused on backward integration and addressing raw material constraints.

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Role in the Tire Manufacturing Industry

Core Business Model

MRF manufactures tires for a range of vehicle segments:

  • Two-wheelers: Brands like Nylogrip, Zapper, Eurogrip
  • Passenger Vehicles: Brands like Perfinza, ZVTS, ZTR
  • Trucks/Buses: Brands like Xtreme, Smart, Super Lug
  • Farm Equipment: Brands like MegaXtract, Responsar
  • Aircraft: Supplied to military, navy, airlines

It has 10 state of the art plants across India to cater to domestic and export demand. MRF relies on in-house R&D and technical collaborations for product development. It sells to OEMs as well as the replacement market through distribution network of 3500+ dealers.

Technological Advancements

MRF has consistently focused on technological improvements:

  • First Indian company to indigenously develop and market nylon tyres in 1973
  • Among early manufacturers of global standard radials in India
  • Special application tyres for defence, mining, construction etc.
  • Investments in new generation products like fuel efficient Ezeeride range
  • Smart tyres with sensor technology for trucks/buses
  • R&D facilities across plants to develop innovative solutions

These efforts have enabled MRF to stay at the forefront of changing industry trends and consumer preferences.

MRF Share Price Analysis

Current Share Price Dynamics

As on 27th January 2024, MRF share price closed at Rs 136,858, with a market capitalization of Rs 58,043 crores. MRF hit a 52-week high of Rs 150,254 in January 2023 and 52-week low of Rs 81,380 in June 2022.

In the last 1 year, MRF share price has gained over 63% as the tyre industry recovered post pandemic but has corrected nearly 9% from 52-week highs due to broader market weakness. However, long term charts show a healthy uptrend indicating the company’s strong competitive position.

Technical Analysis

Moving Averages: Price is above 200 DMA indicating bullishness but 50 DMA at Rs 142,000 poses resistance.

Support Levels: Rs 130,000 and Rs 120,000

Resistance Levels: Rs 142,000 and Rs 148,000

Momentum Indicators: RSI at 45 shows neutral momentum currently. MACD line above signal line is bullish.

Bollinger Bands: Price is testing lower band indicating potential upside.

Overall technical indicators point to consolidation currently but the uptrend is intact. RSI needs to breakout of 45-50 zone for further up move. Immediate support at 200 DMA with resistance at 50 DMA.

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Shareholding Structure of MRF

Shareholder Breakdown

MRF share price holding
MRF share price holding
Shareholder TypePercentage Ownership
Public41.38%
Promoters27.75%
Foreign Institutional Investors (FII)19.41%
Domestic Institutional Investors (DII)11.46%

Promoter holding is relatively unchanged over the years. FIIs, insurance companies and mutual funds collectively hold around 20%. Retail investors account for the majority non-institutional shareholding.

Influence on Stock Performance

The promoter group holding provides stability and long term vision. MRF stock reflects the performance and outlook of the company. Institutional flows especially from FIIs impact the stock in short term along with general market sentiment. Overall, the shareholding mix supports the company’s business strengths.

Annual Results and Financial Performance

In-Depth Analysis of Recent Annual Results

For FY2023, MRF reported:

  • Total revenues of Rs 22,578 crore, up 19% YoY
  • EBITDA of Rs 2,343 crore, up 16% YoY
  • Net profit of Rs 816 crore, up 26% YoY
  • EPS of Rs 1,925, ROE 5.77%, ROCE 8.83%

Growth was driven by volume increase of 14% despite commodity cost pressures. Profitability improved due to operating leverage benefits. Working capital remained high affecting cash flows. Overall results showcase the revival in tyre demand aiding growth and margins.

Working Capital Cycle: Stretched at 87 days owing to high inventory

Evaluation of Financial Health and Stability

Interest Coverage Ratio: 4.68x

Current Ratio: 1.22

Debt/Equity: 0.14

EBITDA Margin: 10.38%

MRF exhibits a healthy financial profile with moderate leverage, satisfactory liquidity and margins. High working capital needs monitoring. Low capital expenditure and stable free cash flows provide stability. MRF is financially well placed currently.

MRF Share Price Targets 2024 -2030

YearShare Price Target Range (Rs)
2024145,000 – 155,000
2025165,000 – 180,000
2026190,000 – 210,000
2027220,000 – 240,000
2028250,000 – 280,000
2029285,000 – 320,000
2030325,000 – 360,000

The share price targets are based on the following assumptions:

  • FY2024-26 revenue CAGR of 12-15%
  • FY2024-26 PAT CAGR of 15-18%
  • Terminal growth rate of 5%
  • Cost of equity: 12%
  • Target PE multiple: 25x

MRF Share Price Target 2024

The share price of MRF in 2024 is expected to be driven by economic recovery, new product introductions, and operating leverage benefits.

  • MRF is likely to deliver a revenue growth of 12-15% in FY2024, supported by revival in automobile demand, new capacity additions, and economic growth.
  • Operating margins are estimated to expand to 12-12.5% in FY2024 from 10.4% in FY2023, as volume growth and cost optimization initiatives improve operating leverage.
  • Net profit could grow by 15-18% owing to operating leverage benefits. This would result in an EPS of Rs 1,800-2,000 for FY2024.
  • Valuation multiple is assumed to be around 30x, which is at a premium to the sector average of 25x, justified by MRF’s market leadership, strong brands and sustained high profitability.
  • Based on an EPS of Rs 1,800-2,000 and target P/E multiple of 30x, the share price of MRF is estimated to be in the range of Rs 145,000-155,000 by FY2024.

MRF Share Price Target 2025

MRF is expected to deliver accelerated growth in revenues and profits by FY2025, aided by capacity expansions and exports demand.

  • Revenues are projected to grow by 13-15% in FY2025, supported by new capacities, recovery in exports markets and market share gains domestically.
  • Operating margins are forecasted to remain stable at 12-12.5% levels, as operating leverage benefits materialize with higher capacity utilization.
  • Net profit could grow at a rate of 16-18% in FY2025, with operating leverage offsetting rising input costs. This would translate into an EPS of Rs 2,100-2,300 for FY2025.
  • The stock is likely to trade at a premium 30x valuation multiple, based on its pricing power, brand strength and higher growth versus peers.
  • Considering an EPS of Rs 2,100-2,300 and P/E ratio of 30x, MRF’s share price is estimated at Rs 165,000-180,000 by FY2025.

MRF Share Price Target 2026

MRF’s share price in 2026 is forecasted to reflect strong topline growth, margin expansion and higher valuation multiple.

  • Revenues could grow at 15-18% in FY2026 on the back of industry growth, new capacities and market share gains in key segments.
  • Operating margins are estimated to improve to 13-13.5% by FY2026, as volume growth results in better absorption of fixed costs.
  • Net profit is projected to increase by 18-20% in FY2026 based on operating leverage benefits. This translates into an EPS of Rs 2,500-2,700.
  • The valuation multiple could expand to 32-34x FY2026 EPS, factoring the company’s strong growth and profitability outlook.
  • Considering the EPS and higher target P/E ratio, MRF’s share price is forecasted to reach Rs 190,000-210,000 by FY2026.

MRF Share Price Target 2027

MRF’s share price in 2027 is likely to continue reflecting strong growth, stable margins and higher valuation multiple.

  • Revenues are estimated to grow by 16-20% in FY2027, aided by domestic auto industry growth and rising exports.
  • Operating margins are expected to remain stable at 13-13.5% in FY2027, supported by volume growth and stable input costs.
  • Net profit could grow by 16-18% driven by operating leverage. This would lead to an EPS of Rs 3,000-3,200 in FY2027.
  • The stock may trade at a premium 34-35x P/E multiple, considering industry upcycle, MRF’s leadership and consistent growth.
  • Factoring in the EPS and higher valuation multiple, MRF’s share price target for FY2027 is estimated at Rs 220,000-240,000.

MRF Share Price Target 2028

In FY2028, MRF’s share price is expected to reflect strong growth, margin expansion and higher valuation multiple.

  • Revenue is forecasted to grow by 15-18% in FY2028, led by new capacities, market share gains and broader industry growth.
  • Operating margins could improve to 14-14.5% by FY2028, due to better capacity utilization and operating leverage.
  • Net profit is estimated to grow by 18-20% in FY2028 based on margin expansion. This would drive EPS to Rs 3,500-3,800 levels.
  • P/E multiple valuation may expand to 36-38x based on consistent profitability and growth outlook.
  • Considering the EPS forecast and higher valuation multiple, MRF’s share price target for FY2028 works out to Rs 250,000-280,000.

MRF Share Price Target for 2029

MRF’s share price in 2029 is projected to reflect stable growth, sustained margins and premium valuation.

  • Revenue is estimated to grow at 12-15% in FY2029, driven by broad based auto industry growth and market share gains.
  • Operating margins are expected to exceed 15% in FY2029, supported by economies of scale, operating leverage and stable input costs.
  • Net profit could grow at 14-16%, driving EPS to Rs 4,000-4,500 levels in FY2029.
  • Valuation multiple is assumed to remain high at 38-40x FY2029 EPS, factoring steady growth and profitability.
  • Considering the EPS and premium valuation multiple, MRF’s share price target for FY2029 works out to Rs 285,000-320,000.

MRF Share Price Target for 2030

In FY2030, MRF’s share price is likely to reflect moderate growth, stable margins and steady valuation multiple.

  • Revenue growth is forecasted to moderate to 10-12% by FY2030, as the auto industry matures.
  • Focus on premium products and exports will support operating margins above 15% despite slower growth.
  • Net profit could grow by 12-14%, driving EPS to Rs 4,500-5,000 levels by FY2030.
  • Valuation multiple may be steady at 35-38x FY2030 EPS, balancing slower growth with sustained profitability.
  • Factoring in the EPS and valuation multiple, MRF’s share price is projected to reach Rs 325,000-360,000 by FY2030.

MRF Share SWOT Analysis

Strengths:

  • Strong Brand Reputation: MRF enjoys a strong brand reputation and customer loyalty in India, particularly in the two-wheeler tire segment. This translates to premium pricing and market share leadership.
  • Diversified Product Portfolio: MRF caters to a diverse range of vehicles, including two-wheelers, four-wheelers, farm vehicles, and off-the-road vehicles. This diversification mitigates risks associated with fluctuations in any specific segment.
  • Robust Financial Performance: MRF exhibits consistent revenue growth, healthy profit margins, and low debt levels, indicating financial stability and potential for future expansion.
  • Focus on Innovation: MRF invests heavily in research and development, focusing on new materials, designs, and manufacturing processes. This commitment to innovation helps maintain a competitive edge.
  • Strong Distribution Network: MRF has a well-established distribution network across India, ensuring efficient product availability and market reach.

Weaknesses:

  • Limited International Presence: While MRF has a growing international presence, it remains primarily concentrated in India. This limits its growth potential in other markets.
  • Dependence on Raw Materials: MRF is heavily reliant on imported raw materials, making it susceptible to price fluctuations and supply chain disruptions.
  • Vulnerability to Economic Downturns: The automotive industry is cyclical, and economic downturns can negatively impact tire demand and MRF’s share price.
  • Competition: MRF faces intense competition from domestic and international players, putting pressure on market share and profitability.
  • Rising Labor Costs: Increasing labor costs in India could impact production costs and profitability.

Opportunities:

  • Expanding International Presence: MRF can capitalize on the growing demand for tires in emerging markets like Southeast Asia and Africa.
  • Electric Vehicle Segment: The rising popularity of electric vehicles presents a significant opportunity for MRF to develop and market specialized tires.
  • Focus on Sustainability: Consumers are increasingly environmentally conscious, and MRF can leverage this by developing fuel-efficient and sustainable tire solutions.
  • Technological Advancements: Continuous investment in R&D can lead to innovative tire designs and manufacturing processes, further enhancing MRF’s competitive edge.
  • Partnerships and Acquisitions: Strategic partnerships and acquisitions can help MRF expand its product portfolio, enter new markets, and access advanced technologies.

Threats:

  • Trade Wars and Protectionism: Rising trade tensions and protectionist policies could disrupt supply chains and impact MRF’s import of raw materials.
  • Government Regulations: Stringent government regulations on tire safety and emissions standards could increase compliance costs for MRF.
  • Fluctuations in Oil Prices: Oil price volatility can impact the prices of raw materials and ultimately the cost of tires, affecting demand.
  • Disruptive Technologies: New technologies like self-driving cars and 3D printing could potentially disrupt the traditional tire industry, posing a long-term threat to MRF.
  • Economic and Political Instability: Political and economic instability in key markets can negatively impact demand for tires and MRF’s business operations.

Comparative Analysis with Competitors’ Projections

  • CEAT: ₹1,200 by 2025 (analyst consensus)
  • Apollo Tyres: ₹1,000 by 2025 (analyst consensus)
  • MRF: Outperforms competitors due to its strong brand presence, market share, and financial stability.

Key competitors CEAT and Apollo Tyres are expected to deliver 10-12% revenue CAGR over next 3 years. MRF’s higher growth forecasts reflect its market leadership.

Future Outlook for MRF Share

Expert Opinions and Market Sentiments

Industry experts highlight steady two-wheeler demand, uptick in automobile sales, firming raw material prices and margin pressure as key factors influencing MRF’s prospects. Most analysts maintain a positive outlook given MRF’s pricing power, new product pipeline and capacity expansion supporting growth.

The recent stock price correction presents an accumulation opportunity per analysts. However, high valuations and competitive intensity pose risks according to some experts. Overall market sentiment remains positive for MRF.

Catalysts for Growth or Potential Challenges

Catalysts

  • Recovery in automobile sales
  • Market share gains
  • New product launches
  • Gujarat plant operating at full capacity
  • Export demand revival

Challenges

  • Slowdown in auto industry
  • Margin pressure from high input costs
  • Further waves of Covid-19
  • Demand risk in exports market
  • High competitive intensity

MRF needs to navigate risks around input costs and exports slowdown. Its strong brand equity, distribution reach and R&D capabilities provide the foundation to tap growth opportunities.

Risk Assessment of MRF Share

Comprehensive Risk Analysis

Industry Risks

  • Downturn in automobile industry
  • Supply chain disruptions affecting production
  • Surge in commodity prices squeezing margins

Company Specific Risks

  • Market share loss to competitors
  • Underutilization of expanded capacities
  • High working capital intensity
  • Exposure to forex fluctuations

Macroeconomic Risks

  • Resurgence of Covid-19 cases
  • Rising inflation and interest rates
  • Liquidity tightening hampering growth

Strategies for Risk Mitigation

  • Diversify across vehicle segments to counter cyclicality
  • Ramp up exports to balance domestic slowdown
  • Rein in costs and enhance efficiency to protect margins
  • Right size inventory and receivables to optimize working capital
  • Leverage pricing power and brand equity to withstand competition
  • Proactive hedging strategy to minimize forex volatility

MRF can leverage its leadership position, extensive distribution network and brand loyalty to mitigate sectoral and macro risks. However, it needs to improve capital efficiency.

Conclusion

  • MRF has charted strong growth despite fluctuations in the auto industry
  • Financial profile is healthy with moderate leverage and stable cash flows
  • Valuations at premium to peers justified by leadership, strong brands and pricing power
  • Share price targets indicate further upside based on growth forecasts
  • Risk management will be key to navigate competitive and macro challenges

MRF’s share price reflects its competitive position and growth outlook. The analysis indicates potential upside based on recovery forecasts for the auto industry. However, continuous tracking of price trends, results and industry developments is advisable to identify inflection points and minimize downside risks. Overall, MRF remains a core holding given its leadership and extensive capabilities. But prudent risk management is essential.

References and Citations

Financial Reports:

Analyst Reports:

News Articles:

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