MRF, short for Madras Rubber Factory, is renowned for having the most expensive stock in the Indian markets. Let’s delve into why its share price is so high:
- No Stock Split or Bonus Shares:
- Unlike many companies that periodically split their stocks to enhance liquidity and affordability for investors, MRF has never split its stock or issued bonus shares.
- Stock splits increase the number of shares available in the market without affecting the underlying value of each share.
- For instance, Tata Steel recently split its stock in a 10:1 ratio, effectively reducing the per-share price from ₹1000 to ₹100.
- MRF’s refusal to split its stock has contributed to its high share price12.
- Financial Performance:
- MRF’s financial performance justifies its high valuation:
- Promoter Holding: The company’s promoters maintain significant ownership.
- Sales and Profits: MRF consistently performs well, expanding its market share and global business.
- Return on Investment: Investors have confidence in MRF’s ability to generate returns.
- Debt to Equity Ratio: The company manages its debt prudently1.
- MRF’s financial performance justifies its high valuation:
- Brand Reputation:
- MRF boasts a strong brand name and is considered one of India’s best tire manufacturers.
- Its products remain in high demand, contributing to sustained investor interest and a high share price3.
In summary, MRF’s refusal to split its stock, coupled with its solid financials and brand reputation, positions it as the most expensive share in India. Currently, its share price hovers around ₹81,500 per share, equivalent to the cost of a new Honda Activa1.
