Shares of Mahindra & Mahindra (M&M) slipped 6 per cent to Rs 2,666.45, its sharpest intra-day fall in seven months, on the BSE in Friday’s intra-day trade. Earlier on July 10, 2024, M&M had plunged 7.8 per cent in intra-day deal, the BSE data shows.
With today’s decline, in the past two months, the stock price of the passenger cars and utility vehicles company has tanked 17 per cent from the level of Rs 3,197.75 on February 7. It had hit a record high of Rs 3,276.30 on February 10. According to media reports, the Indian government is gearing up to announce a new Electric Vehicle (EV) policy that aims to reduce import duties and attract global players like Tesla. Elon Musk’s Tesla Inc is likely to enter the Indian market through direct imports, rather than committing to local manufacturing in the immediate future, according to reports. M&M’s board on Thursday, February 20, approved a proposal to subscribe to the equity shares of Mahindra & Mahindra Financial Services Limited (MMFSL) and Mahindra Lifespace Developers Limited (MLDL) to the full extent of the company’s Rights entitlement; and to subscribe to additional shares as well as to any unsubscribed portion of the Rights Issue(s) up to the total issue size. MMFSL and MLDL are listed subsidiaries of M&M.
The board of directors of MMFSL has approved fund raising of an amount not exceeding Rs 3,000 crore and MLDL has approved fund raising of up to Rs 1,500 crore through Rights issues.
MMFLS is one of India’s leading non-banking finance companies. Along with its subsidiary companies and joint ventures (JVs), MLDL is engaged in developing residential projects as well as industrial developments, integrated cities and industrial clusters.
Mahindra Group enjoys a leadership position in farm equipment, utility vehicles, information technology and financial services in India and is the world’s largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality and real estate.
Despite the correction from its record high, in the past one year, M&M has outperformed the market by surging 45 per cent. In comparison, the BSE Sensex and BSE Auto index was down nearly 4 per cent during the same period.
Meanwhile, for the passenger vehicle (PV) segment, most companies have a very cautious outlook for the financial year 2025-26 (FY26). The reason is that PV affordability has remained impacted; benefits from income tax cuts are likely to be limited for the bottom-of-pyramid segment, while currency depreciation may raise costs. Hence, the key players think the premium/SUV segment will continue to do well (M&M expects 8 per cent utility vehicle (UV) industry growth with MM outperforming the industry), while the mass segment may remain subdued, analysts at Nomura said in a sector report.
Recent dealer surveys and retail registration trends do indicate weaker demand in Feb-2025. The brokerage firm is hopeful that easing liquidity, improved capex and interest rate reductions should start taking effect by H2FY25F. OEM estimates of SUVs growing faster also imply that small cars may decline in FY26F. Analysts said they prefer M&M in PVs as a play on the SUV segment as well as rising EV adoption.
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