Mahindra & Mahindra shares fall 4% as promoter group sells stake

Shares of Mahindra & Mahindra dropped 4% in intraday trade on Thursday after the company's promoter entity sold 0.9% stake via a block deal.

Mahindra’s promoter group entity Prudential Management and Services Pvt Ltd (PMSL) carried out the stake sale worth ₹2,184 crore.

"Post transmission of shares of PMSL held by the former Chairman of M&M, Late Mr. Keshub Mahindra (who passed away on 12th April, 2023), to his family members, the family is looking for liquidity for specific needs, and hence proposes to sell a small number of shares held by PMSL in M&M," the company says in a stock exchange filing.

"The family shall continue to retain the status of Promoter Group of M&M and there is no intention to sell further shares in the foreseeable future," the filing says.

Reacting to the development, shares of Mahindra & Mahindra fell 4% to ₹1,885 on the BSE, taking the conglomerate’s market cap to ₹2.35 lakh crore.

In February, M&M signed the first supply agreement on the use of key electric components of German carmaker Volkswagen’s MEB (modular electric drive matrix) for Mahindra’s electric platform INGLO. The deal covers the supply of certain electric components as well as unified cells. With the agreement, Volkswagen and Mahindra have deepened their collaboration which started with a partnering agreement and a term sheet in 2022. Mahindra will be the first external partner to use the German carmaker’s unified cell concept, the core element of Volkswagen's battery strategy. The supply agreement will run over several years and will have a total volume of about 50 gigawatt hour over lifetime.

Mahindra is eyeing 20-30% of its sales from EVs by 2027. Currently, it is India’s third-largest electric carmaker after Tata Motors and MG Motor India. To catch up in EVs, Mahindra plans to launch five all-electric SUVs in India based on its new, “purpose-built electric platform INGLO”, starting December 2024. It is also looking to launch an electric version of its popular off-roader Thar.

Mahindra’s overall auto sales for the month of February stood at 72,923 vehicles, a growth of 24%, including exports. In the Utility Vehicles segment, Mahindra sold 42,401 vehicles in the domestic market, a growth of 40% and overall, 42,941 vehicles, including exports. The domestic sales for commercial vehicles stood at 22,825 last month.

Net profit of Mahindra & Mahindra jumped 61% year-on-year to ₹2,454 crore for the quarter ended December 31, 2023 led by strong performance by the auto vertical. Profit was ₹1,528 crore in the third quarter of the previous fiscal.

The Mumbai-based company’s revenue rose 16% year-on-year to ₹25,642 crore during the third quarter as against ₹22,113 crore in the year-ago period.

Operating profit or earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 10% to ₹3,590 crore.