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M&M buys 36.6% in radio taxi operator; stock slides

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Mahindra & Mahindra (M&M) said it has completed acquisition of 36.63% stake in Meru Travel Solutions in the first tranche as part of its Rs 201.5-crore deal to acquire 55% shareholding in the radio taxi operator.

M&M said it has invested Rs 44.71 crore (in cash consideration) for the acquisition of 36.63% of the equity share capital of Meru. The company has also earned the right to appoint majority of the directors on the board of Meru.

Consequently, Meru has become a subsidiary of the company with effect from 5 December 2019. Also subsidiary companies of Meru -- Meru Mobility Tech, V-Link Automotive Services, V-Link Fleet Solutions -- have in turn become subsidiaries of M&M, it added.

In September M&M had announced signing of a share subscription and shareholder agreement for subscribing up to 55% of equity share capital of Meru Travel Solutions in tranches.

M&M said it is keen to grow its presence in shared mobility space and with the acquisition of stake in the firm, the auto major will enter in the corporate shared mobility space which is an area of strategic interest to the company. The announcement was made after trading hours yesterday, 5 December 2019.

Shares of M&M lost 1.30% to Rs 517.80. The stock was trading at a range of Rs 517.25 to Rs 530 so far during the day.

M&M fell 1.52% in two trading sessions to its current market price of Rs 517.80 from its recent closing high of Rs 525.80 on Wednesday, 4 December 2019.

Meanwhile, the S&P BSE Sensex was down 19 points or 0.05% to 40,760.40.

In the past one month, shares of Mahindra & Mahindra dropped 10.61% to its current market price of Rs 517.80, underperforming the Nifty Auto index's 3.77% fall in the same period.

On the technical front, the stock's RSI (relative strength index) stood at 28.927. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was currently trading below its 50-day moving average (DMA) placed at Rs 566.45, as well as below its 200 DMA placed at Rs 605.46.

M&M's consolidated net profit tanked 78.9% to Rs 340.86 crore on 5.9% decline in net sales to Rs 23,935.93 crore in Q2 September 2019 over Q2 September 2018.

M&M is engaged in the manufacture of passenger cars, commercial vehicles and tractors.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, December 06 2019. 11:46 IST