M&M drops on reports of foreign brokerage downgrade

Mahindra & Mahindra fell 1.39% to Rs 1,444.10 at 12:44 IST on BSE on reports that a foreign brokerage has downgraded the stock to neutral from buy citing expensive valuations.

Meanwhile, the S&P BSE Sensex was up 85.44 points or 0.31% at 27,900.62.

On BSE, so far 23,000 shares were traded in the counter as against average daily volume of 95,638 shares in the past one quarter. The stock hit a high of Rs 1,460.95 and a low of Rs 1,431 so far during the day. The stock had hit a record high of Rs 1,480.20 yesterday, 13 July 2016. The stock had hit a 52-week low of Rs 1,092 on 12 February 2016. The stock had outperformed the market over the past one month till 13 July 2016, surging 7.89% compared with 5.37% rise in the Sensex. The scrip had also outperformed the market in past one quarter, advancing 9.89% as against Sensex's 8.54% rise.

The large-cap company has equity capital of Rs 310.55 crore. Face value per share is Rs 5.

The foreign brokerage reportedly said that Mahindra & Mahindra's (M&M) stock valuations are pricing in strong growth in tractors segment. The brokerage expects the company's tractor volumes to recover after two-year gap. The brokerage said that M&M's utility vehicle segment is facing strong competition.

M&M after market hours yesterday, 13 July 2016, announced the incorporation of subsidiary company in the name of Merakisan to carry on the business of procuring and marketing agricultural produce including fruits and vegetables. Merakisan was incorporated as a wholly owned subsidiary of Mahindra Univeg (MUPL) which is a step-down subsidiary of M&M.

M&M's net profit rose 6% to Rs 583.73 crore on 14.8% growth in net sales to Rs 10666.43 crore in Q4 March 2016 over Q4 March 2015.

The Mahindra Group enjoys a leadership position in tractors, utility vehicles, information technology, financial services and vacation ownership. In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting services, defence, energy, industrial equipment, logistics, real estate, retail, steel, commercial vehicles and two-wheeler industries.

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