Stock market tip: Experts expect MRF share price to rise 35 pct in 12 months
MRF share price is expected to touch Rs 70,000 per shares in long-term perspective means in one year or 12 months, say stock market experts.
At a time when stock market experts are advising share market investors to follow buy on dips strategy as the market is trading range-bound till Nifty trades in the range of 11,500 to 11,800, Dalal Street traders are in the wait and watch mode as they are expecting further cues post-Lok Sabha Elections 2019. However, the market experts are also advising the traders to check the fundamentals and technicals of the stocks. MRF is one such stock. As per the market experts, the MRF share price is expected to touch Rs 70,000 per share in long-term of 12 months. Currently, the counter is oscillating around Rs 52,935 levels (at 12:30 PM on May 3 when the report was written) and the market experts are expecting around 800 to 1,000 rupee correction in the counter and advising investors to buy the counter once it corrects near 500 points from current levels.
Giving details of the fundamentals of MRF company Jay Kale, Chief Financial Analyst at Elara Securities said, "MRF revenue increased 5 per cent YoY to Rs 40.7bn, which is above our estimates. Its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) declined 17 per cent YoY but grew 4 per cent QoQ to Rs 5.7bn, 2 per cent below our estimates. EBITDA margin was up 30bp QoQ to 14 per cent against our estimates of 15 per cent. The RMC-sales ratio fell 40bp QoQ to 60.9 per cent, owing to softness in RM basket. Other expenses increased 18 per cent YoY and 3 per cent QoQ to Rs 7.3bn, likely led by higher and expenses while employee expenses-sales ratio declined 40bp QoQ. PAT dipped by 15 per cent YoY to Rs 2.9bn, 2 per cent below our estimates, primarily due to higher depreciation expenses."
Giving details about the recent quarterly results of the MRF Jay Kale went on to add that April 2019 has started on a positive, not for the tyre industry, which is expected to trickle down to MRF as well. "While Q4 replacement was soft, our checks suggest April volume growth has bounced back to double-digit growth for tyre industry. In Q4, we believe revenue growth drags due to market share loss in OEM segment and slowdown in the replacement segment, especially in the truck & bus and PCR segments. Domestic sales in FY19 grew 6 per cent YoY to Rs 142.7bn and exports sales grew 16 per cent YoY to Rs 15.7bn," said Jay Kale of Elara Securities.
On his suggestion to the stock market investors in regard to MRF shares jay Kale said, "Right now, the MRF counter is showing an upside potential and can show Rs 63,534 per stock levels in immediate term while after breaking this level it may show the next target of 68,974 in long-term."
Asked about the technical perspective of the MRF shares SEBI registered technical equity analyst Simi Bhaumik said, "MRF is a portfolio share and in current market scenario it's highly bullish. However, there are chances of around Rs 500 correction or may by Rs 1,000 correction in next few trading sessions as profit booking is expected into the MRG counter. I would advise stock market investors to take a buy position in the counter post-profit booking and an investor should add on the MRF counter if it further dips in the range of Rs 50,000 to Rs 51,000 levels." On target for which an investor can take a buy position in the MRF counter, Simi Bhaumik said, "One can buy this counter for long-term means for one year or 12 months and book profit in the range of Rs 69,000 to Rs 70,000 per stocks levels."
Therefore, if an investor buys an MRF share, he or she can expect around 35 per cent return on his or her investment in 12 months, say experts.