One share for ₹1.65 lakh: Could this company make you rich? Global brokerage says 'buy'

Brokerage houses are divided on MRF shares. On one hand, global brokerage firm Citi has issued a 'buy' recommendation, while on the other, Motilal Oswal has advised selling.

Experts remain bullish on MRF shares. Global brokerage firm Citi has set a target price of ₹1,65,238 for the leading Indian tire manufacturer, MRF Limited, and has recommended a 'buy'. This implies a potential upside of approximately 30% from the current price of around ₹1,27,125.

In the September quarter, the company's revenue grew by 18% year-on-year to ₹85.2 billion. However, due to a sharper-than-expected rise in raw material costs, the company's EBITDA margin contracted by 430 basis points (bps) year-on-year to 10.7%. This margin pressure also led to a 28% year-on-year decline in Profit After Tax (PAT), which stood at ₹3.7 billion. Nevertheless, Citi remains highly confident in the company.

According to a report by CNBC-TV18, the brokerage firm noted that the pressure on margins would have been even more severe had the company not raised prices in the replacement segment by 13–15% during the first half of the 2027 fiscal year. In other words, cost-reduction measures helped mitigate some of the impact of rising raw material prices.

Furthermore, the brokerage believes that the recent softening in crude oil and commodity prices, combined with the company's cost-cutting initiatives, will lead to a significant improvement in profitability by the 2027–28 fiscal year. Motilal Oswal Advises Selling

While Citi remains bullish on MRF shares, domestic brokerage firm Motilal Oswal has assigned a 'sell' rating to the stock, with a target price of Rs 1,05,400.

The brokerage believes that due to heavy capital expenditure and pressure on margins, the company's Return on Capital Employed (RoCE) could fall to as low as 7%—a figure significantly below the industry standard.

Meanwhile, high prices for rubber and crude oil have compressed the company's operating margin (EBITDA margin) to 10.7%. According to the brokerage, any recovery in margins is likely to be slow, even if the company raises its product prices.

High Risk for the Stock

Motilal Oswal further notes that, given its weak return ratios and sluggish profit growth, MRF shares are trading at an excessively high P/E (price-to-earnings) multiple. At current levels, the stock presents high risk and limited upside potential for investors.

Instead of MRF, Motilal Oswal suggests Apollo Tyres and CEAT as better alternatives, as they offer more attractive valuations and superior return profiles.

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