M&M shares fell 6% in intraday trade on February 21 to Rs 2,666.45, the biggest intraday drop in seven months. The stock has declined 17% in two months from its February 7 peak of Rs 3,197.75.M&M’s board approved subscribing to rights issues of MMFSL (up to Rs 3,000 crore) and MLDL (up to Rs 1,500 crore). Despite a strong 45% gain in the past year, market caution over the PV segment in FY26 has impacted investor sentiment. Analysts expect the SUV market to outperform, while mass-segment vehicle sales may remain sluggish.
Key Highlights:
M&M Stock Sees Steepest Intraday Fall in Seven Months:
Mahindra & Mahindra (M&M) shares dropped 6% to Rs 2,666.45 in intraday trading on February 21, marking the company’s biggest single-day decline in seven months. Earlier in the day, the stock fell as much as 7.8%, its largest intraday drop since July 10, 2024.
The decline extends M&M’s recent downtrend, with the stock losing 17% over the past two months. The company reached a record high of Rs 3,276.30 on February 10 but has since struggled to maintain its upward momentum.
Rights Issue Plans Weigh on Market Sentiment:
On February 20, M&M’s board approved full subscription to the rights issues of Mahindra & Mahindra Financial Services Limited (MMFSL) and Mahindra Lifespace Developers Limited (MLDL), both subsidiaries of the company.
- MMFSL, one of India’s leading non-banking finance companies, received approval for a fundraise of up to Rs 3,000 crore.
- MLDL, which specializes in real estate, integrated cities, and industrial clusters, secured approval for capital raising up to Rs 1,500 crore.
Additionally, M&M announced it would subscribe to any unsubscribed portion of the rights issues, ensuring full funding for both subsidiaries. While this move aligns with the company’s growth plans, investors reacted cautiously, leading to a sell-off in M&M stock.
Market Outlook and Industry Challenges:
Despite M&M’s long-term strength, concerns over the broader passenger vehicle (PV) industry have weighed on investor sentiment.
Analysts at Nomura predict that while premium SUVs will continue to perform well, the mass-market segment may remain under pressure in FY26 due to:
- Stagnant PV affordability: Income tax cuts are expected to have minimal impact on the entry-level car segment.
- Currency depreciation: A weaker rupee could increase vehicle costs.
- Demand softening: Retail registration data and dealer surveys indicate slowing demand in February 2025.
However, analysts remain optimistic about the SUV segment, with M&M projecting 8% growth in its utility vehicle (UV) business, surpassing industry estimates.
Long-Term Growth Prospects for M&M:
Despite the recent dip, M&M remains a strong performer in the auto sector. Over the past year, the stock has surged 45%, significantly outperforming the BSE Auto index and BSE Sensex, both of which declined around 4% in the same period.
Looking ahead, analysts expect:
- Stronger SUV sales as demand for premium vehicles outpaces mass-market models.
- Potential interest rate cuts in H2FY25, which could improve liquidity and capital expenditures.
- Rising adoption of electric vehicles (EVs), where M&M is making strategic investments.
Mahindra & Mahindra’s stock has faced short-term pressure following its rights issue approval and broader market concerns. However, with strong positioning in the SUV segment, financial services, and real estate, M&M remains a key player in India’s evolving auto industry. Investors will closely monitor demand trends and macroeconomic factors to gauge the stock’s future trajectory.
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