M&M sinks 4% on profit booking as promoter entity PMSL dilutes stake in co

M&M's promoter group entity Prudential Management and Services (PMSL) said it has proposed to sell a small number of M&M shares to meet liquidity needs

Shares of Mahindra & Mahindra (M&M) slipped 4 per cent to Rs 1,884.3 on the NSE in Thursday’s intra-day trade after over 10 million equity shares changed hands on the counter via bulk deals.

Till 09:25 am; around 12.9 million equity shares, representing 1.06 per cent of total equity of M&M, changed hands on the NSE, exchange data showed. 

M&M's promoter group entity Prudential Management and Services (PMSL) has proposed to sell a small number of M&M shares to meet liquidity needs. 

"Post transmission of shares of PMSL held by former M&M Chairman, Late Keshub Mahindra, to his family members, the family is looking for liquidity for specific needs, and hence proposes to sell a small number of shares in M&M," the auto company said in an exchange filing.

The family will continue to retain the status of promoter group of M&M and there is no intention to sell further shares in the foreseeable future, it said. 

Reports, prior to market opening, suggested PMSL has offered to sell 0.75 per cent equity of M&M for Rs 1,832 crore at a price range of Rs 1,911.5–1,970.65. The upper band represented a 3 per cent discount to the stock's closing in the previous session on Wednesday.

Management consulting firm Prudential Management held an 11.64 per cent stake in M&M as of December 2023.

Meanwhile, despite today's decline, in the past one year, shares of M&M have outperformed the market by surging nearly 50 per cent.

In comparison, the S&P BSE Sensex rallied 23 per cent. Thus far in the calendar year 2024, M&M gained 12 per cent, as against a 2.5 per cent rise in the benchmark index.

The stock had hit a record high of Rs 1,982.30 on March 1.

M&M 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.

Analysts at LKP Securities expect strong SUV run to continue as demand remains healthy. Within the Auto sector, the robust order book of Scorpio N variants, Thar and XUV family should rapidly cater to the waiting period. New launches in both ICE and EV segments should further drive further volumes, they say. 

The brokerage expects low single digit de-growth for the FES segment of M&M on waning tractor cycle, low khariff output, slow rabi sowing and unseasonal rains.

New launches may provide some fillip to FES. In EV 3Ws and LCVs too, with new launches the company is in a position to expand its market leadership position, however the management has become cautiously optimistic on the LCV segment, it said.

Meanwhile, M&M’s management said southern and western states continue to face agri stress due to erratic and deficient monsoon.

However, Rabi crop outlook is very good, with wheat crop likely to be a bumper crop. Harvesting has started in a few states with the government supporting early procurement of wheat crop.

Continued government support through various rural schemes and enhanced institutional credit will further help boost tractor demand going forward, they said.