Mahindra & Mahindra (M&M) dropped 2.38% to Rs 1,280.95 at 14:35 IST on BSE after the company said it will participate in the proposed rights issue of Mahindra Lifespace Developers.
The announcement was made during market hours today, 11 November 2016.Meanwhile, the S&P BSE Sensex was down 519.96 points or 1.89% at 26,997.72.
More than usual volumes were witnessed on the counter. On BSE, so far 2.28 lakh shares were traded in the counter as against average daily volume of 67,127 shares in the past one quarter. The stock hit a high of Rs 1,318 and a low of Rs 1,285 so far during the day. The stock had hit a record high of Rs 1,508.80 on 9 August 2016. The stock had hit a 52-week low of Rs 1,092 on 12 February 2016. The stock underperformed the market over the past one month till 10 November 2016, declining 4.12% compared with 2.01% fall in the Sensex. The scrip also underperformed the market in past one quarter, shedding 8.74% as against Sensex's 0.93% fall.
The large-cap company has equity capital of Rs 310.55 crore. Face value per share is Rs 5.
M&M said that the board of directors of the company approved investment of an amount not exceeding Rs 165 crore, in one or more tranches by subscribing to the proposed rights issue of Mahindra Lifespace Developers (MLDL). MLDL, a listed subsidiary of M&M on 27 October 2016 had said that its board approved raising funds by rights issue aggregating to Rs 300 crore.
Shares of MLDL shed 1.89% to Rs 406.45.
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Separately, M&M's net profit rose 27.08% to Rs 1163.27 crore on 16.98% rise in total income to Rs 12071.13 crore in Q2 September 2016 over Q2 September 2015. M&M's combined net profit of M&M and Mahindra Vehicle Manufacturers Limited (MVML) rose 29% to Rs 1253 crore on 18% increase in gross revenue and other income to Rs 12049 crore in Q2 September 2016 over Q2 September 2015. The result was announced during market hours today, 11 November 2016.
MVML was set up as a 100% subsidiary of M&M with a view to sourcing contemporary products for expanding the market offerings of the company. Hence it is a critical part of M&M's business and only the combined results of M&M and MVML (combined entity) can provide a comprehensive view of the company's performance.
M&M in its outlook said that India's macro economic story is slowly but surely taking shape although data on industrial production and slow trade growth continued to act as ceilings to India's growth. The IMF avers that in the current and projected global scenario, India will continue to standout with the fastest growth rate. And this prognosis is not without reason. After two years of sub-par rainfall, this year's monsoon has been abundant and well spread which will help revive farm income and push up private consumption. The first advance estimates released by the agriculture ministry for kharif crops this year suggests a record output, higher by 9%. Higher soil moisture due to good monsoon also augurs well for the Rabi crop. Higher crop output will help improve spends on agri-inputs and services. Moreover, prices of key agricultural inputs have stabilized which signals that farmer balance sheets are on the mend now and this will help revive the overall rural economy.
Importantly, there is discernible traction on reforms including GST which augurs well for India's growth trajectory. Moreover, there are signs of demand recovery manifesting through broader consumption pick-up in growth rates in automobile sales, air passenger traffic and retail loans. The Seventh Pay Commission and the OROP scheme award has put money in the pockets of government employees and pensioners which will further help demand. The lagged effects of interest rate cuts by the Reserve Bank of India (RBI) along with the increased transmission of lower interest rates will also be supportive of consumption. All of these bode well for broad-based consumption led growth in the coming quarters, M&M added.
M&M enjoys a leadership position in tractors and utility vehicles in India.
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