M&M records sharpest intra-day fall in 28 months; stock slips over 7%

The stock slipped 7.3% to Rs 2,711.75 on the BSE in Wednesday's intra-day trade recorded its sharpest intra-day decline since February 14, 2022.

Shares of Mahindra and Mahindra (M&M) slipped 7.3 per cent to Rs 2,711.75 on the BSE in Wednesday’s intra-day trade amid heavy volumes and profit booking by investors. The stock of the automobile company has recorded its sharpest intra-day fall in the past 28 months.

Earlier, on February 14, 2022, M&M had tanked 8.6 per cent in intra-day trade. Last month, on June 4, the day of Loksabha election results puhed the stock down by 7.1 per cent, BSE data shows.

In past eight months, the market price of M&M has appreciated by 92 per cent. In the current calendar year 2024, it has rallied 70 per cent. In comparison, BSE Auto index surged 37 per cent and BSE Sensex gained 10 per cent. The stock had hit a record high of Rs 3,013.95 on June 18.

 

At 11:39 am; M&M was trading 6.7 per cent lower at Rs 2,730, as compared to 0.84 per cent decline in the BSE Sensex. The average trading volumes on the counter more than doubled. A combined 5.97 million shares changed hands on the NSE and BSE.

According reports, M&M has slashed the prices of its popular SUV vehicles in a bid to stimulate demand.

M&M on Tuesday announced special ex-showroom pricing for all the AX7 variants of their XUV700 SUV effective for four months starting July 10, 2024. The AX7 range now starts at Rs 1.94 million, down from the earlier price of Rs 2.15 million. This announcement comes with the celebration of the XUV700’s third anniversary and the milestone of selling around 200,000 units in less than three years, the Business Standard reported earlier.

Meanwhile, M&M has outlined an aggressive capex plan of Rs 27,000 crore over FY25-27E in auto segment primarily at product development and capacity expansions. This includes Rs 12,000 crore earmarked for PV-EV space. Its plans aggressive product launches, including 9-ICE SUV’s (6 new ICE models, 3 refreshes incl. XUV 3XO) and 7 BEV’s by 2030 with some models expected to launch by 2025.

The brokerage firms ICICI Securities and Prabhudas Lilladher have ‘Buy’ rating on M&M with a target price of up to Rs 3,420 per share.

Given the historical track record of healthy response from customers towards new launches with healthy bookings within a short span of time, analysts at Prabhudas Lilladher believe the company could deliver on its market share aspiration. The management expects volume to grow by 5-6 per cent driven by forecasts of above-normal rains this monsoon and success of the new launches of OJA, Target & Naya Swaraj.

ICICI Securities maintains a positive view on M&M and retained 'Buy' rating on the stock supported by strong market leadership in SUV and Tractor space, an impressive pipeline of new product, and consistent focus on capital efficiency (RoE>=20 per cent).

Meanwhile, M&M in its FY24 annual report said, factors that may significantly influence demand for automobiles in F25 are policies by the Government to boost consumption, aggressive Government push for infrastructureled growth and increase in cost of ownership due to commodity price and fuel price increase.

The mid to long term outlook for the Indian tractor industry is positive. The industry is seeing an upswing with harvesting of crops underway and expectations of a bumper crop this Rabi season. Government budgets on infrastructure and rural development are likely to benefit commercial demand. Further, the demand for mechanisation is also growing as shortage of agricultural labour will lead to increase in labour cost, the company said.