[dZired]

28th September 2016 proved to be a historic day for MRF Ltd, as the company's stocks experienced a gain of 7.29% to cross the Rs. 50,000 mark on the Bombay Stock Exchange (BSE). It eventually retreated a bit to close the day at Rs. 49,989, still showcasing a gain of 7.27%. After Wednesday's rally, the company's market-cap was Rs. 21,201 Crore. MRF Ltd. is currently the most expensive stock listed on the BSE.

MRF stocks have seen a surge of around 650% in the last five years, while the last one year saw the company being traded in a wide range of Rs. 30,000 - 50,000. Interestingly, MRF soared by 20.93% during the past year, as compared to BSE's gain of 10.45% in the same period. The company also registered its highest-ever earnings per share of Rs. 1,157.5 during the last quarter.

Market experts suggested that the huge stock price was a result of rising demand from OEMs, higher market share in the replacement market and a limited number of shares available for trading.

MRF is the third company to cross the Rs. 50,000 stock price mark in the Indian market. Government owned MMTC and Orissa Mineral were the first two to achieve this level in 2007 and 2010, respectively.

Source: Economic Times

Link to Team-BHP News

[SmartCat]

Disappointing headline, coming from a business newspaper. Misleading articles like this are responsible for most stock market investors losing money.

Anybody who understands the fundamentals of stock investing knows that a company trading at Rs. 100 per share can be more 'expensive' than another company trading at Rs. 100,000 per share.

At a PE of 13.72 and 3 times book value, the valuation of MRF is not unreasonable. All its peers (Ceat, Apollo etc) are trading in a similar valuation band.

[ghodlur]

Originally Posted by dZired

Market experts suggested that the huge stock price was a result of rising demand from OEMs, higher market share in the replacement market and a limited number of shares available for trading.

The main reason for the stock price of the company to be soaring to new heights is the drop in the rubber prices.

Reasons for fall in Indian prices
1) Decline in natural rubber prices in major overseas markets
2) Higher imports
3) Favourable weather
4) Progress in tapping activities in Kerala
5) Rubber board indicates production rise of 6.4 percent in June and 2.3 percent in Q1

http://www.moneycontrol.com/news/buz...1_7361921.html

[vinit]

Originally Posted by smartcat

Disappointing headline, coming from a business newspaper. Misleading articles like this are responsible for most stock market investors losing money.

Absolutely right. There are many companies whose stock has split several times over the years. Had that not been the case, their share price might have also crossed 50K.

In any case, just the share price is not the criteria to decide whether the stock is expensive or not. To put it simplistically, it depends on how much the market expects (read PE ratios) from a stock vis-a-vis its ground reality (read EPS)