MRF Share Price In Free Fall: Tyre Stock Declines By Over Rs 3,145 In 1 Day After Q2FY24 Earnings

Despite dividends recommendation, tyre giant MRF's share price was in a free fall in the second half of Friday's trading session, as much as nosediving by nearly 3% or Rs 3,146 in single-day. The share price was in deep red due to weak performance in the Q2FY24 quarter on a sequential basis.

After the announcement of Q2 earnings, where MRF's performance had been broadly weak on a sequential basis, the company's share price dropped steeply. However, year-on-year, MRF's performance has been robust in the quarter.

At the time of writing, MRF shares traded at Rs 1,08386.70 apiece, down by Rs 2,125.70 or 1.92% on BSE. The market cap is nearly Rs 46,000 crore.

Overall, MRF shares fell by Rs 3,146.15 or 2.85% by hitting an intraday low of Rs 1,07,366.25 apiece during the day.

Before the Q2 results, in the first half, MRF shares traded steady and had even touched an intraday high of Rs 1,11,700 apiece on the exchange.

In the previous session, MRF shares stood at Rs 1,10,512.40 apiece.

Nevertheless, MRF's current share price is still higher by 33% from its 52-week low of Rs 81,390.95 apiece. The stock's 52-week high is at Rs 113,379.10 apiece. Year-to-date, MRF's share is up by Rs 20,354 or 23.11% on BSE.

In the second quarter of FY24, MRF earned a consolidated net profit of Rs 585.43 crore, attributable to the owners, rising by 302.74% or 4.03 times from PAT of Rs 145.36 crore in Q2 of FY23. However, sequentially, the Q2 PAT had declined as against a profit of Rs 609.66 crore in the June 2023 quarter.

Meanwhile, consolidated revenue from operations stood at Rs 6,217.10 crore, also up from Rs 5,826.30 crore in Q2FY23 but down from Rs 6,440.29 crore in Q1FY24.

Also, on a standalone basis, MRF reported a net profit of Rs 571.93 crore, as against Rs 123.99 crore in Q2FY23 and Rs 581.45 crore in Q1FY24. Also, revenue stood at Rs 6,087.56 crore in Q2FY24, climbing from Rs 5,719 crore in Q2FY23 but lower from Rs 6,323.28 crore.

Apart from the Q2 results, MRF has also declared an Interim Dividend of Rs 3/-per equity share [30%] for the financial year ending 31st March 2024. The company fixed November 17th as the record date for determining eligible shareholders for the benefits. The company said the interim dividend declared will be paid on or after 30 November 2023.

Has anyone ever wondered why MRF shares are so expensive? It's currently the most expensive stock in India on a per equity share basis. According to Angel One's website, the reason behind its expensive share price is primarily due to the limited number of shares available in the market. Additionally, MRF has never undergone a share split to decrease the share price. The equity capital of the company is Rs 4.24 Crore and it is still the same. MRF shares hold the distinction of having the highest denomination among all the companies listed in India.

On the Trendlyne website, MRF shares are referred under the Strong Performer, Getting Expensive (DVM) category which means that these stocks have high durability and momentum scores, and valuation less than or equal to 50. These stocks are considered strong performers whose valuation is getting expensive.

Further, Trendlyne data indicated that MRF's Relative Strength Index (RSI) and Money Flow Index (MFI) are in the mid-range of 59.1 and 53.1 respectively. While it's PE TTM and price-to-book value are below the industry median at 37.3 and 3.13 respectively. Additionally, the average broker target in MRF shares is Rs 75,400, down by 30.5% from current levels.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.