M&M overtakes Tata Motors to become 2nd most valued auto company

Mahindra & Mahindra (M&M), a part of the Mahindra Group, has become the second most-valued automobile company in the country after Maruti Suzuki India. The market capitalisation (m-cap) of billionaire industrialist Anand Mahindra-led company soared to ₹1.64 lakh crore on Thursday, driven by more than 3% gain in its share price. With this, Mahindra’s m-cap has soared beyond that of Tata Motors, a leading automobile manufacturer. The combined market cap of Tata Motors and Tata Motors DVR stood at ₹1.58 lakh crore, as per the BSE data. Maruti Suzuki India is the country’s most valued automobile company with m-cap of ₹2.65 lakh crore.

Snapping a two-session losing streak, M&M shares opened 0.9% higher at ₹1,301, against the previous closing price of ₹1,289.25 on the BSE. During the session, the stock gained as much as 3.26% to hit a fresh all-time high of ₹1331.25, breaching its previous record high of its previous high of ₹1,330.30 touched on September 2, 2022.

Paring some of the intraday gains, the auto stock ended 2.48% higher at ₹1,321.25. There was a surge in volume trade as 2.69 lakh shares worth ₹35.6 crore changed hands over the counter as compared to the two-week average volume of 1.42 lakh stocks.

In comparison, the S&P BSE Auto index ended 0.62% higher, while the BSE benchmark Sensex settled 659 points higher at 59,688 levels.

M&M share price has doubled in the last six months, from its 52-week low of 671 on March 3, 2022, to ₹1,331.25 in intraday today. The share trades higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. The large cap stock has delivered 75% returns in the last one year and 59% in the calendar year 2022 (year-to-date). The counter has risen 4% in one month and 1.5% over a week.

The stock has witnessed a strong rally in the last six months, aided by strong quarterly earnings and the firm's potential in the electric vehicles (EV) sector. The homegrown auto major has recently teamed up with Volkswagen Group for sourcing components from the European automaker’s MEB (open platform for EVs) for the launch of its brand new Indian Global (INGLO) platform. The company recently announced plans to launch five electric SUVs under two brands—XUV and the all-new electric-only brand Born Electric (BE)—by 2027.

On the earnings front, Mahindra’s net profit surged 67% to ₹1,430 crore in the quarter ended June 30, 2022, from ₹857 crore in the year-ago period, on the back of strong operational performance and low base year. The consolidated revenue rose 66.7% year-on-year to ₹19,612.64 crore, from ₹11,764.82 crore in the same period last year.

In a fresh development, the auto major’s subsidiary, Mahindra Agri Solutions (MASL) has divested its entire stake of 91.59% in Merakisan Private Limited (MKFL), a subsidiary of MASL, to its founder and promoter Prashant Patil. Prashant Patil is the founder and full-time director and CEO of MKPL. He is an existing stakeholder of MKPL, holding 7.95% of the company's paid-up equity share capital.

Following the sale, MASL's stake in MKPL became Nil, and MKPL will no longer be a subsidiary of MASL, M&M said in an exchange filing today.

As per the filing, the consideration received is ₹1 for the sale of 1,16,05,000 equity shares. “The net worth of MKPL is negative and hence the consideration for sale of stake is arrived at a nominal value as agreed between the parties,” it said.