M&M share up 2% on acquiring Sampo Rosenlew Oy; rises 76% in 4 months

Shares of Mahindra & Mahindra (M&M) gained nearly 2% in early trade on Tuesday after the auto major raised its stake in the Finland-based combine harvester company Sampo Rosenlew Oy to 100% with the acquisition of residual shares for over ₹35 crore. In the past four months, the auto stock has zoomed 76% from its 52-week low of ₹671 on March 8, 2022, to ₹1,183.75 in early trade today. M&M share is trading close to its all-time high of ₹1,191.90 touched on July 8, 2022, on the BSE in the intraday deal.

On Tuesday, M&M share price opened a tad lower at ₹1,160 against the previous closing price of ₹1,163.05 on the BSE. In the first hour of trade so far, the Sensex heavyweight climbed 1.8% to hit a high of ₹1,183.75, as compared to a 0.07% rise in the S&P BSE Sensex. At the time of reporting, the stock was trading at ₹1,182.60, up 1.68%, with 35,000 equity shares changing hands on the BSE so far, as against a two-week average volume of 2.39 lakh scrips.

What fuelled the rally in M&M shares?

The recent rally in M&M shares can be attributed to a slew of positive business developments, fall in metal prices and robust monthly sales. Last week, the stock touched an all-time high after British International Investment (BII) proposed to invest up to ₹1,925 crore or $250 million into a new electric passenger vehicle company to be set up by the Anand Mahindra-led auto company.

The share price of the Mumbai-based automaker was also supported by fall in metal prices, a key input for production, which is likely to improve profit margins for the company.

The sentiment was further boosted after the firm reported 59% year-on-year growth in passenger vehicle sales to 26,880 units in June. The total vehicle sales (passenger and commercial vehicles) during the month stood at 54,096 units.

In a fresh development, M&M in an exchange filing on Monday said it has executed an option exercise share purchase agreement to acquire 1,317 equity shares of Sampo Rosenlew Oy. Following the transaction, M&M’s shareholding in Sampo would increase from 79.13% to 100% and it would become a wholly owned subsidiary of the company.

Sampo is a European combine harvester company, well-known for mid-sized combine harvesters in the markets of Europe, Eurasian countries and North Africa and is also a joint venture partner for combine harvesters in Algeria. Based in Finland, it is a manufacturer of combine harvesters and forest machinery with market presence in Europe, CIS and Algeria. The company had a total revenue of Euro 52 million for the year ended March 31, 2022.