Preserving Value: Exploring MRF's Choice to Avoid Stock Split

This report by Bhavya Rathod elucidates how stock price, in isolation, may not convey the true value of the company. The price of one share, among other factors, is also a function of the outstanding shares of the company. When shares’ outstanding are low, and if the demand for that stock is high, the lower supply translates into a higher price for that share. When the price of a share keeps rising, it may reach a level that may become unaffordable to a lot of investors. Therefore, some companies opt for a ‘stock split’ so as to make the shares affordable and reach out to more retail investors

MRF made waves and created history on Dalal Street by becoming the first Indian stock to reach the remarkable milestone of ₹100,000 per share on June 13, 2023. It is worth noting that MRF shares had touched their 52-week low of ₹65,900.05 on the BSE on June 17, 2022. Analysing the stock’s performance over the past decade, it has outperformed the benchmark Sensex index on seven occasions. However, between 2018 and 2021, MRF underperformed the Sensex. In the current year of 2023, MRF shares have shown a positive growth of more than 13 per cent, while the benchmark Sensex has gained over 6.5 per cent. Although MRF has reached the significant ₹100,000 milestone, it is important to highlight the substantial disparity with the second-highest priced stock, namely, Honeywell Automation, which trades at around the level of ₹42,000