This hot stock could be the best gift you ever give to your granddaughter
On asking if Jain should sell MRF shares, Gaurang Shah of Geojit Financial Services replied he should instead pass on his MRF stock holding to the next generation. "If you don't need money at the moment, you should hold the stock because the next target that I see on MRF is Rs 1 lakh as the company has an impressive balance sheet, an excellent management, their own rubber plants, and credible governance," Shah said.
Ever thought of gifting a stock to your kid or even better, grandchild? If you did, and are still wondering which one to zero in on, then among the toppers is definitely MRF. The stupendous return that this tyre stock has generated over the last few decades is simply unbelievable. From its August 2001 price level of Rs 500, MRF share price has surged a whopping 16,184 per cent to its all-time high level of Rs 81,423 that it hit in Monday's trade.
Earlier this month, Ravi Jain, a viewer told Zee Business his grandfather had bought 10,000 shares of MRF at Rs 9000 each. His grandfather's initial investment turned into Rs 67 crore when he last checked after paying for brokerage commission and other costs.
On asking if Jain should sell MRF shares, Gaurang Shah of Geojit Financial Services replied he should instead pass on his MRF stock holding to the next generation.
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"If you don't need money at the moment, you should hold the stock because the next target that I see on MRF is Rs 1 lakh as the company has an impressive balance sheet, an excellent management, their own rubber plants, and credible governance," Shah said.
"There is no reason to sell MRF stock. One should give it to the next generation, telling them to pass it on to another," he added.
Kotak Securities also has a buy rating on the stock with a target price of Rs 1 lakh.
"We express our firm conviction in MRF and suggest a BUY on the stock with a target price of Rs 100,000 with two to three years investment perspective. We expect MRF to improve substantially its revenues and earnings in the next 3 to 4 years due to substantial expansions it has proposed. We expect its revenues to cross Rs 200 billion and EPS to go up to around Rs 5,800 by FY2020," said Kotak Securities in a November 2017 report.
"We firmly believe that MRF, being a leader, could also see a re-rating of its valuation multiple in the next 3 years on such a larger revenues (which are mostly derived by MRF brand). We expect the stock to breach our target price of Rs 100,000/ somewhere in 2019, on our expectation of 17.2 timrs FY2020E EPS of Rs 5,800," it added.
At present, the company is trading at twelve-months price-to-equity ratio (P/E) of 22.80 and earnings per share (EPS) is at Rs 3504.29 which is way higher than its peers like Apollo Tyre – whose EPS is mere Rs 12.27, CEAT Rs 56.04 and JK Tyre has a negative EPS of Rs 0.29 per share.
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Madras Rubber Factory (MRF) commonly known as MRF is scheduled to report its March quarter results for FY18 on Thursday. The company's net profit grew 18.2 per cent to Rs 340.51 crore in the December quarter of FY18 from Rs 288 crore reported in the same quarter of FY17.
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