Neutral on MRF, target price Rs 83,730: Motilal Oswal

Motilal Oswal has neutral call on MRF with a target price of Rs 83730. The current market price of MRF is Rs 80591.15. Time period given by analyst is one year when MRF Ltd. price can reach defined target.

MRF Ltd., incorporated in the year 1960, is a Large Cap company (having a market cap of Rs 34046.01 Crore) operating in Tyres sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 4874.20 Crore, up 3.59 % from last quarter Total Income of Rs 4705.22 Crore and up 30.14 % from last year same quarter Total Income of Rs 3745.21 Crore. Company reported net profit after tax of Rs 332.15 Crore in latest quarter.


Investment Rationale
Current valuations at 27.2x/20.7x FY22E/FY23E EPS fairly capture the changing competitive dynamics for MRF. The brokerage maintains a Neutral rating, valuing it at 20x Sep’23E EPS (v/s 21.5x/14.5x its five-/10-year average P/E) to arrive at the TP of INR83,730.

Promoter/FII Holdings
Promoters held 27.8 per cent stake in the company as of June 30, 2021, while FIIs held 14.1 per cent, DIIs 13.7 per cent and public and others 44.5 per cent.