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So far in the calendar year 2018, MRF shares have beat the market by gaining 8% against 0.05% decline in the benchmark index. In past nine consecutive calendar years, the stock had outperformed the market. Since January 2008, MRF zoomed 3,791% from Rs 2,003 against 252% rise in the Sensex.
Analysts at Elara Capital reiterate ‘Accumulate’ on MRF with a target price of Rs 80,543 based on 16x (unchanged) FY20E EPS, given its market leadership, strong distribution network and healthy balance sheet compared to peers.
“MRF’s key strength of its exclusive distribution network is evident from its smooth transition to GST compared to its peers. Further, there has been an increased focus on expansion of distribution network of MRF in recent quarters which would drive its revenue growth in coming years. MRF has now increased supplies of its 2W tyres which have been in shortage in recent years as is now flexing its brand muscle for market share gains,” the brokerage firm said in Q3 results update.
Analyst at Anand Rathi Share and Stock Brokers has ‘buy’ rating on MRF with a target price of Rs 80,045 as the brokerage firm expects better revenue growth and stable rubber prices augur well for MRF’s margin expansion in coming quarters.
Government announced increase in customs duty on truck and bus radials (TBR) imports from 10% to 15% in union budget FY19 which augurs well for tyre companies. While incremental benefit will be limited owing to already low imports post Goods and Services Tax (GST) and Anti-dumping duty (ADD); it gives further confidence in sustained depressed Chinese imports, it added.
|MRF price on BSE in Rs at 01:07 pm.|
|*Yearwise returns in %|