Why Is the MRF Share Price So High?

When investors browse the Indian stock market and come across the share price of Madras Rubber Factory (MRF), the reaction is almost universal: ‘Why is the MRF share price so high?’ As of early 2025, MRF is trading at upwards of ₹1,30,000 per share, making it the most expensive stock in absolute terms in India.

But does a high share price automatically mean the stock is expensive or overvalued? Not necessarily. Let’s understand the reasons behind MRF’s consistently high stock price.

Why is the MRF share so expensive?

Here are some of the factors that make MRF share expensive.

1. Absence of stock splits and bonus issues

One of the primary reasons for MRF’s high share price is its decision to avoid stock splits and bonus issues. While many companies opt for stock splits to make their shares more affordable and increase liquidity, MRF has chosen not to follow this practice. The Company last issued bonus shares in 1970 and 1975 and has not split its stock since then.

2. Market leadership and brand reputation

MRF holds a dominant position in the Indian tyre industry, particularly in the two-wheeler segment, with a market share of over 70%. Furthermore, MRF’s association with prominent sports personalities and events, including endorsements by cricket legends and sponsorships in international cricket tournaments, has improved its brand visibility and prestige.

3. Historical returns and investor sentiment

MRF’s stock has delivered impressive returns over the decades. For instance, an investment of ₹1 lakh in MRF shares in 1993, when the share price was around ₹15, would be worth crores today.

4. Strategic expansion and innovation

MRF continually invests in expanding its product portfolio and adopting new technologies. The Company has recently introduced specialised tyres for luxury vehicles, electric scooters, and commercial vehicles, catering to evolving market demands.

5. Limited free float

MRF has a very low number of outstanding shares, around 42.4 lakh, many of which are held by promoters and long-term institutional investors. This creates a limited free float in the market, significantly reducing the supply of shares available for trading.

When demand is high, but supply is limited, prices increase.

Events contributing to MRF stock price surge

To understand the MRF Tyres’ share price history, let’s look at the key milestones and events that contributed to its rise.

• The 1970s

In 1971, MRF opened its third manufacturing plant in Goa to boost production capabilities. In 1972, it set up a fourth plant in Arakkonam. In 1973, MRF became the first Indian company to manufacture and market nylon passenger car tyres commercially. Nylon offers superior durability, better grip, and better performance than conventional rubber tyres.

In 1978, MRF introduced the MRF Superlug-78, a robust tyre designed for heavy-duty trucks. This product became a game changer and eventually became India’s largest-selling truck tyre in later years.

• The 1980s

In 1980, MRF expanded its distribution network and added an extensive dealer network to improve supply chain efficiency. This expansion allowed MRF to cater to a growing demand for high-quality tyres, particularly in the commercial and passenger vehicle segments.

One of its major achievements was the 1985 launch of MRF Nylogrip tyres, which changed the two-wheeler tyre segment with improved grip and durability. In 1988, MRF ventured into sports by founding the MRF Pace Foundation under the leadership of Australian fast-bowling legend Dennis Lillee.

• The 1990s

During the 1990s, MRF expanded its influence beyond the automotive industry. In 1990, MRF brought the 6th World Cup Boxing Championship to Mumbai. The Company continued to innovate in tyre technology, launching radial tyres and establishing a dedicated factory for their production in Pondicherry by 1996. MRF also ventured into Formula 3 racing in 1997.

The decade saw MRF strengthening its global presence through collaborations, including partnerships with Hasbro International USA for toy manufacturing and Vapocure Australia for polyurethane paint formulations.

• The 2000s and beyond

In 2001, MRF won its first JD Power award. The Company continued its success in motorsports, securing multiple Asia-Pacific Rally Championship (APRC) victories, with its rally team winning titles in 2001, 2003, 2005, and beyond. By 2007, MRF reached a turnover of $1 billion. That same year, it launched ZSLK tyres, India’s first eco-friendly tyre.

Expansion continued with the opening of new manufacturing plants, including its seventh plant in Ankanpally in 2011 and additional facilities in Trichy dedicated to radial tyre production. In 2013, MRF’s Aero Muscle became the first Indian tyre chosen for the Sukhoi 30 MKI fighter jet.

MRF’s current scenario

To understand how the MRF share price will perform in future, here are the key pointers to look at:

• Revenue and profitability

MRF Limited recently reported its Q4 FY25 financial results. The Company recorded revenue from operations at ₹24,674 crore, reflecting a steady increase compared to the previous fiscal year. However, net profit declined 7.6% year-over-year (YOY) to ₹379.6 crore, primarily due to rising raw material costs and fluctuating demand.

• Dividend declaration

Despite the dip in profitability, MRF announced a dividend of ₹194 per share, reaffirming its commitment to returning value to shareholders.

• Market trends and stock performance

MRF’s stock exhibited bullish trends in the long and short term, indicating positive investor sentiment. However, tyre stocks, including MRF, faced selling pressure due to lower volume growth forecasts for FY25, leading to a 3-4% decline in stock prices.

• Industry challenges and outlook

The tyre industry has been grappling with rising input costs and fluctuating demand, impacting overall profitability. MRF, however, remains optimistic about future growth, backed by strategic investments in research and development.

Conclusion

MRF’s high share price results from strategic choices, financial discipline, brand legacy, and market psychology. It reflects a company that has stayed true to its roots while adapting steadily to changing market conditions.

However, whether it fits your investment strategy depends on your risk appetite, investment horizon, valuation comfort, and current portfolio.

Sources:

MRF Tyres
Mint