Why Do Companies Like MRF Don’t Split the Stock cover

Why Do Companies Like MRF Don’t Split the Stock?

Ever wondered why do companies like MRF don’t split the stock? If you check the current market price of MRF Share, it’s hovering at a whopping price of Rs 84,470 per share. Its all-time high for the last 52 weeks is Rs 98,599. Even though the price of one share is too high for this company, the interesting question here is why the MRF’s management/promoters are not splitting its shares? After all, buying a stock at Rs 84,470 per share is not financially viable for most retail investors.

In this article, we are going to answer the same. Here, we are going to discuss why companies like MRF don’t split the stock. However, before we discuss these expensive stocks, let’s first study why companies split their stocks?

MRF latest Share price - most expensive share in India

Quick Note: If you are do not know what is stock split and bonus shares, then check out this post first- Stock split vs bonus share – Basics of stock market

An Interesting study on companies that Rapidly Split Stocks in Past

You might have heard about the wealth creation story of Infosys. A small investment in the 100 shares of Infosys in 1993 would be worth over Rs 6.04 crores by now. (Also read: How to Earn Rs 13,08,672 From Just One Stock?)

In the last 25 years, Infosys has given multiple bonuses and stock splits to its shareholders. And, that’s why the share price of Infosys is still in the affordable purchase rate for the average investors. In fact, if Infosys has not given so many bonuses and splits, the price of one share of Infosys might have been over multiple lacks by now. Here is the bonus and split history of Infosys from 1993 till 2018:

infosys split

(Source: Moneycontrol)

Besides, Wipro is another common stock with a similar story. Because of its consistent bonuses and splits, the Wipro share is still in the purchase range for the retail investors. Else, if the management had decided not to give any split or bonus, then the share of Wipro might also have been over multiple lakhs and maybe over crores by now. (Also read: Case Study: How 100 shares of WIPRO grew to be over Rs 3.28 crores in 27 years?)

The big question – Why do companies split a share?

Here are four common reasons why companies split their shares-

  1. Stock splits help the companies to make the share price affordable for retail investors. For example,  if a company is trading at a share price of Rs 3000 and it offers a stock split of 10:1, then it means that its price will drop to Rs 300 per share after the split. Now, which price is more affordable to the public- Rs 3,000 or Rs 300? Obviously, Rs 300.
  2. The stock split makes the stock more liquid and hence increases its trading volume. This is because the total number of outstanding shares increases after the stock split.
  3. Splitting a stock does not affect the financials of a company. Although the outstanding shares of the company will increase after the split, however, the face value will decrease in the same proportion. Overall, stock splits don’t affect the financials and hence the companies are willing to go for it.
  4. As small and retail investors are more interested in affordable shares, stock splits help in increasing their participation and overall helps the companies to build a broadly diversified investor base for their stock.

Overall, in terms of value, the stock split doesn’t matters much as the financials of the company remains the same. However, by splitting the shares- the company is able to keep the shares affordable to the public and hence maintains a wide ownership base.

Companies that do not split their shares – List of few Costliest Shares!

The reasons to split shares might be clear by reading the above paragraph. However, the next big question is why few companies do not split their shares? Why the share price of many stocks in the share market is still in the 5 figures if they have an option to split their stocks.

If you check the current market price of the companies listed on the Indian stock exchange, you can find out that there are many companies whose share price is above Rs 5,000. Here are a few of the top ones:

CompanyIndustry Market Cap (Rs Cr)Current Price (Cr)
MRF Ltd.Tyres & Allied35528.2983770.55
Honeywell Automation India Ltd.Consumer Durables - Electronics39314.5844465.85
Rasoi Ltd.Consumer Food303.231387.65
Page Industries Ltd.Textile33131.1929703.75
3M India Ltd.Diversified30843.2527379.55
Shree Cement Ltd.Cement & Construction Materials97260.3526956.3
Nestle India Ltd.Consumer Food159994.6516594.25
Abbott India Ltd.Pharmaceuticals & Drugs31139.5814654.4
Bosch Ltd.Auto Ancillary42343.1314356.7
The Yamuna Syndicate Ltd.Trading433.3514099
Tasty Bite Eatables Ltd.Consumer Food3559.8213873.05
Procter & Gamble Hygiene & Health Care Ltd.Household & Personal Products42288.0613027.45
Bombay Oxygen Investments Ltd.Industrial Gases & Fuels153.7410249
Bharat Rasayan Ltd.Pesticides & Agrochemicals4082.519608.75
Bajaj Finserv Ltd.Finance - Investment149727.659408.7
Polson Ltd.Chemicals106.638885.9
Paushak Ltd.Chemicals2479.928046.15
Indiamart Intermesh Ltd.e-Commerce24265.637991.65
Sanofi India Ltd.Pharmaceuticals & Drugs17683.377678.2
TTK Prestige Ltd.Consumer Durables - Domestic Appliances10043.827231.65
Maruti Suzuki India Ltd.Automobiles - Passenger Cars214573.517103.2
Lakshmi Machine Works Ltd.Textile - Machinery7439.486963.85
Atul Ltd.Chemicals20425.576903.55
Ultratech Cement Ltd.Cement & Construction Materials194197.976728
Procter & Gamble Health Ltd.Pharmaceuticals & Drugs10543.516351.75
Wabco India Ltd.Auto Ancillary11639.556136.55
Kama Holdings Ltd.Plastic Products3556.685512
Hawkins Cookers Ltd.Consumer Durables - Domestic Appliances29125507
Gillette India Ltd.Household & Personal Products17895.315491.85
Bajaj Finance Ltd.Finance - NBFC324743.365389.15
Alkyl Amines Chemicals Ltd.Chemicals10885.795332.85
Schaeffler India Ltd.Bearings16580.545303.95
Affle (India) Ltd.Telecommunication - Equipment13510.525299
SRF Ltd.Diversified31296.585282.55
Blue Dart Express Ltd.Courier Services12436.885241.45
Bayer CropScience Ltd.Pesticides & Agrochemicals22897.555094.9

Quick Note: The above prices and values are updated till March 2021!

All these shares are not easily affordable for the average retail investor. Even the shares of Maruti are trading at a current price of above Rs 7,100. 

Why Do Companies Like MRF Don’t Split the Stock?

Why do companies like MRF don’t split the stock

Here are a few common reasons why few companies do not split their shares:

1. They are already doing good. Why bother to split?

Many of these companies are already good. Then, why should they bother to split the share and make it cheap?

For example- MRF was trading at a share price of Rs 6,358 in March 2010. Currently, as of March 2021, it is trading at Rs 84,470. The people might have argued that the stock was expensive and not affordable even in 2010. However, it has done pretty well in the last 11 years and given a return of over 1,100% to its shareholders.

mrf latest share price march 2021

In short, if a company is doing good, they why it should bother to go through the splitting process. It’s already making money for itself and its investor, even when the share price is expensive.

2. No financial benefits

There are literally no financial benefits while splitting the shares. The value of the stock remains the same after stock splitting (the financial statements and ratios don’t change). That’s why until and unless the promoters have any good enough reason, the share splitting does not appeal much to the management and promoters.

3. Keeps Speculators away

The stock split increases liquidity and makes the stock affordable. This results in an increase in the participation of retail investors and traders. And with an increase in participation, speculation also increases. On the other hand, a high share price helps to keep the traders and speculators away from the stock. Only serious investors are the ones who can find these companies appealing and might want to enter these stocks.

Another benefit of the high share price is that it keeps the newbie investors away from them. As the new investors are mostly attracted to the affordable companies and are not willing to invest a high amount, therefore their participation is quite low in these companies.

4. Limited Public Shareholding

The high share price of a company results in limited public shareholding. Retail investors and traders can’t easily enter such stocks. Sometimes, this also helps in decreasing the volatility in the share price. Moreover, by allowing the high share price, the promoters tend to keep the voting right in their hands. This helps in maintaining a static voting right which allows the owners to make key decisions without much interference.

Besides, fewer public shareholding also helps in avoiding scenarios like creeping acquisition or in worst case hostile takeovers. Expensive stocks discourage acquisition.

5. Symbol of Status and Uniqueness

Do you know that one share of Warren Buffett’s company- Berkshire Hathaway costs around Rs 2.74 crores? Yes, that’s true. The current share price of Berkshire Hathaway Inc. Class A is $3,77,440. Similarly, MRF is known in India for such an extremely high share price.

A high share price can be sometimes regarded as a symbol of status. Splitting that share means losing this exclusiveness.

Closing Thoughts

There are no specific guidelines or rules from SEBI or any stock exchange about a stock split. Therefore, the prices of the shares can go as high as they can and the company is not obliged to offer any split.

As we discussed in this article, there are both pros and cons of a high share price. The biggest advantage of a high share price is that it helps to keep the traders and speculators away from that share. Anyways, a company might choose whether it wants to split a share or not- depending on what suits them best for their interests.

That’s all for this post on Why Do Companies Like MRF Don’t Split the Stock. I hope it was helpful to you. If you still have any doubts/queries on this topic, feel free to comment below. I’ll be happy to help. Take care and Happy Investing!

#12 Companies with Highest Share Price in India (Updated 2021)

#12 Companies with the Highest Share Price in India (Updated)

List of Companies with the highest share price in India (Updated – March 2021): The majority of shares in India trade at a share price below Rs 1,000 per share on Indian stock exchanges. However, there are a few stocks that trade at a price in the multiples of thousands of rupees.

Although, the share price of a company has nothing to do with the companies valuation, and even a company with a share price of Rs 2,000 can be undervalued compared to its peers. Anyways, for the small retail investors, it might be a little difficult to enter those stocks which trade at a very high share price.

In this article, we are going to discuss the most expensive shares in India i.e. the companies with the highest share price in India. Here, we’ll look at 12 of the costliest shares in India based on the current share price at which they are trading in the market.

Note: Please study the companies carefully if you want to invest in any of the stocks mentioned in the list here. A high stock price doesn’t guarantee a fundamentally strong company or a good investment. And vice versa. Let’s get started.

#12 Companies with Highest Share Price in India

1. MRF (Rs. 85,541)

mrf-tyres Companies with Highest Share Price in India

Market Capitalisation = Rs. 36,279 Cr

Madras Rubber Factory (MRF) is a Tyre manufacturer that produces a wide range of tyres. It specializes in Car & bike tyres, trucks/bus tyres, etc.

Currently, MRF has the highest share price in India among all the listed companies on BSE/NSE. The all-time high share price of MRF is Rs. 96,973. The stock is currently trading at a standalone PE of 22.66.

MRF has never split its share and has a face value of Rs. 10. Noticeably, this company was trading at a price of Rs. 10,000 in November 2012.

Also read: Why Do Companies Like MRF Don’t Split the Stock?

2. Honeywell Automation (Rs. 46,985)

honeywell

Market Capitalisation = Rs. 41,542 Cr

Honeywell Automation India Ltd, a part of Honeywell group, USA and is a leader in providing integrated automation and software solutions. It has a wide product portfolio in environmental and combustion controls, and sensing and control, etc.

This stock has given a return of over +235% in the last 5 years. It is currently trading at a PE of 88.92.

3. Page Industries (Rs. 28,675)

page industries

Market Capitalisation = Rs. 31,984 Cr

Page Industries is an Indian manufacturer and retailer of innerwear, loungewear, and socks. One of the popular brands under Page Industries is Jockey (Underwear and inner wears company). This stock has turned out to be a multi-bagger stock in the last couple of years and has given a return of over +2,000% in the last ten years.

Page Industries is currently trading at a PE of 124.92.

4. 3M India (Rs. 27,953)

3m india Products | Companies with highest share price in India

Market Capitalisation = Rs. 31,489 Cr

3M India Ltd is the subsidiary listed company of 3M Company USA in India. 3M Company USA holds a 75% equity stake in the company. It has a diversified portfolio of products in dental cement, health care, cleaning, etc.

This stock is currently trading at a PE of 544.93.

5. Shree Cements (Rs. 26,817)

shree cements

Market Capitalisation = Rs. 96,759 Cr

Shree Cement is an Indian cement manufacturer headquartered in Kolkata. This Indian cement manufacturer company was founded in Beawar, Ajmer district, Rajasthan, in 1979. Shree Cement is the biggest cement maker in northern India and also produces and sells power under the name Shree Power and Shree Mega Power.

Shree cements is currently trading at a PE of 45.38.

Also read: How to Invest in Share Market? A Beginner’s guide!

6. Dixon Technologies (Rs. 20,074)

Dixon Technologies Logo | Companies with highest share price in India

Market Capitalisation = Rs. 23,515 Cr

Dixon Technologies (India) Ltd is an Indian multinational electronics manufacturing services company, based in Noida, Uttar Pradesh, India. It is a contract manufacturer of televisions, washing machines, smartphones, LED bulbs, battens, downlighters, and CCTV security systems for companies such as Samsung, Xiaomi, Panasonic, and Philips.

It is currently trading at a PE of 170.61.

7. Nestle India (Rs. 16,458)

Nestle Products

Market Capitalisation = Rs. 1,58,681 Cr

Nestle India is in the food processing industry with a wide variety of products like Maggi, Kit-Kat, Nescafe, Every day, etc.

 It is the Indian subsidiary of Nestlé which is a Swiss multinational company.

This stock is currently trading at a PE of 76.20.

8. The Yamuna Syndicate Ltd. (Rs. 14,980)

The Yamuna Syndicate Ltd | Companies with highest share price in India

Market Capitalisation = Rs. 460 Cr

The Yamuna Syndicate Limited engages in trading & marketing tractors, industrial lubes, automotive, batteries, electrical, pesticides & fertilizers, sugar, and also runs petrol pumps. The company was incorporated in 1954 and is based in Yamuna Nagar, India.

This stock is currently trading at a PE of 52.52.

9. Abbott India (Rs. 14,730)

abbott india share

Market Capitalisation = Rs. 31,302 Cr

Headquartered in Mumbai, Abbott India Limited, a publicly listed company and a subsidiary of Abbott Laboratories, takes pride in offering high-quality trusted medicines in multiple therapeutic categories such as women’s health, gastroenterology, cardiology, metabolic disorders, and primary care.

It is currently trading at a PE of 48.22. This stock has given a return of over 179% in the last 5 years.

10. Bosch (Rs. 14,660)

bosch

Market Capitalisation = Rs. 43,238 Cr

Bosch ranks 10th in the list of companies with the highest share price in India. It is a part of the German multinational company Robert Bosch (or just Bosch), headquartered in Germany. Bosch belongs to the automobile ancillaries industry.

It is currently trading at a PE of 529.62 (52-week high – Rs. 16,679).

11. Tasty Bite Eatables (Rs. 13,977)

tasty bytes

Market Capitalisation = Rs. 3,586 Cr

This company operates in the food processing industry with products like tasty bite rice, noodles, entrees, etc. The Company offers a range of ready-to-serve (RTS) ethnic food products under the brand name Tasty Bite and Frozen Formed Products (FFP).

This stock is currently trading at a PE of 105.48.

Also read: How To Invest Rs 10,000 In India for High Returns?

12. Procter & Gamble (Rs. 12,855)

Procter and Gamble Products | Companies with highest share price in India

Market Capitalisation = Rs. 41,731 Cr

P & G is in the personal care industry with products in hygiene and health care. The Company is involved in the manufacturing, trading, and marketing of health and hygiene products. The Company’s brands include Ambi Pur, Ariel, Duracell, Gillette, Head & Shoulders, Olay, Oral-B, Pampers, Pantene, Tide, Vicks, Wella, and Whisper.

This stock is currently trading at a PE of 62.77.

Summary

Here is the list of Companies with the Highest Share Price in India along with a few other popular stocks added:

S.No.Company NameShare Price (Rs)MarketCap (Rs Cr)Current PE
1MRF85,541.6036,279.4222.66
2Honeywell Auto46,985.2541,542.1288.92
3Page Industries28,675.2531,984.01124.92
43M India27,953.6531,489.98544.93
5Shree Cement26,817.3596,75945.38
6Dixon Technologies20,074.7523,515.30170.61
7Nestle India16,458.101,58,681.9576.20
8The Yamuna Syndicate14,980460.4352.52
9Abbott India14,730.9531,302.2448.22
10Bosch14,660.3043,238.56529.62
11Tasty Bite Eatables13,977.853,586.72105.48
12Procter & Gamble12,855.9541,731.3662.77
13Bombay Oxygen10,306.05154.596.56
14Bharat Rasayan9,657.654,103.2826.74
15Bajaj Finserv9,544.851,51,894.30462.77
16Polson9,104.95109.2614.86
17Paushak8,556.252,637.1380.75

Disclaimer: The list of 12 Companies with Highest Share Price in India is till date March 2021. The stock market is dynamic and the stock prices will change in the future, which may change the list or the order of the companies listed here.

That’s all for this post on ‘#12 companies with the highest share price in India’. Most of the companies on this list are trading at a high PE. If you want to buy any one of them, then please study the company carefully.

Just being the costliest shares in India doesn’t make them a good pick for investment. Moreover, past performance does not guarantee future returns.

Further, do comment below which other stocks can find a place in this list of companies with the highest share price in India by next year (March 2022)? And which ones will be thrown out of the list, according to you? Happy Investing!