MRF share price at Rs 1 lakh possible? What technical and fundamental analysis suggest

Buoyed by 86% year-on-year (YoY) rise in profit in the March quarter, shares of tyre manufacturer MRF have rallied around 8% in just 2 sessions, raising hopes that the stock price may cross the coveted Rs 1 lakh mark.

After ending Wednesday’s session with a 5.6% rally, MRF shares were trading 1.8% higher at Rs 95,200 on the BSE. In the last one year, the stock has surged 32%.

MRF fundamental outlook
Brokerage firm Anand Rathi recommended a ‘hold’ rating on MRF with a target price of Rs 96,000, which shows limited upside from the current market price.

"For MRF, replacement demand would gradually recover as economic activity rises and the impact of the high base fades. OEM demand would be healthy at high single digits. We expect 6% volume growth over FY23-25. EBITDA margins would be stable from Q4 as most of the benefit of lower input costs have already been factored in," it said.

On the other hand, both Motilal Oswal and Kotak Institutional Equities have maintained sell ratings on the stock with targets at Rs 75,400 and Rs 66,000, respectively.

"MRF’s competitive positioning within the sector has weakened over the past few years, which is also being reflected in the dilution of pricing power in the PCR and TBR segments. This, coupled with the impact of capex to be carried out, should result in limited expansion in return ratios," Motilal said.

Technical Analysis of MRF
While fundamental analysts are seeing a downside, technical analysts are seeing an upside in the stock with targets touching Rs 1 lakh.

Mahesh Prakot, Research Analyst at Bonanza Portfolio, said a bullish move is possible in MRF toward Rs 1,00,000 levels. On the downside, the stock has a strong support at Rs 88,250.

"After a long bullish rally, the price has witnessed a sideways momentum and formed a Cup & Handle pattern on a weekly timeframe. In the last trading session, the price has given a breakout of the falling supply trend line after taking support of 50 Exponential Moving Averages indicating bullish strength," Mahesh Prakot said.

In addition, The RSI (14) on a weekly chart has climbed near the 62- mark, which also signals strength in momentum on the higher side. At the same time, the MACD also suggested a positive crossover confirming a long position. The accumulation/distribution indicator is also supportive of the current bullish rally, he added.



Ameya Ranadive of Choice Broking said the Rs 98,500–1,00,000 range, which is also 61.8% of the Fibonacci expansion levels, may serve as a target zone. "The critical levels for MRF are anticipated to be between Rs 94,000-95,000, given that it was a good supply zone in the past nine months. However, the current RSI of 78 suggests that the stock is overbought on daily charts, and profit-taking may be expected," the analyst said.

Vaishali Parekh of Prabhudas Lilladher, pointed out that MRF is now trading near the resistance level of Rs 95,000, where it has resisted a couple of times. “There is support around 200-DMA, which is near Rs 86,000 levels. A decisive move past 95,000 would improve the bias and anticipate further upward movement,” she said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)