HM scrip jumps 20% on stake sale reports

Shares of Hindustan Motors (HM) today rose 20 per cent to Rs 24.60 on the Bombay Stock Exchange, amid reports that global auto majors were eyeing a stake in the Kolkata-based carmaker.

Although the reports named General Motors (GM), Mitsubishi Motors and Isuzu Motors as the potential suitors, the office of the company’s managing director, Manoj Jha, denied the developments. “The news is speculative in nature. Hindustan Motors is unable to respond to these rumors,” an official said.

GM India also denied the reports. “The reports are absolutely baseless,” P Balendran, vice-president, GM India, said.

Analysts, however, said HM’s idle capacity at the Uttarpara (West Bengal) and Chennai plants could be utilised by carmakers looking at increasing production in the country at a reasonable value.

“Mitsubishi already has a tie-up with HM, so we can see synergies here,” Neeraj Bandhu of automotive consultancy CSM Worldwide said. HM and Mitsubishi Motors have a collaboration to manufacturer sedans and sport utility vehicles for the domestic market.

PwC auto practice leader Abdul Majeed said other car makers should be able to capitalise on HM’s infrastructure if they were able to bring in newer technologies.

Last month, HM had said it would report itself to the Board for Industrial and Financial Reconstruction (BIFR), as its net worth had eroded by more than 50 per cent during the past four financial years.

The company posted a net loss of Rs 31.8 crore on net sales of Rs 164.5 crore in the quarter ended March. In the same period last year, net loss was Rs 25.3 crore on net sales of Rs 129.4 crore.