Mahindra & Mahindra shares tumble 2% after board approved Rs 4,500 crore rights issue plan

Synopsis

Mahindra & Mahindra shares dropped 2% after it announced its subsidiaries will raise up to Rs 4,500 crore through rights issues. MMFSL aims to raise Rs 3,000 crore, while MLDL targets Rs 1,500 crore, with M&M fully subscribing to its rights entitlement.

Shares of Mahindra & Mahindra (M&M) tumbled 2% to their day’s low of Rs 2,781.35 on the BSE after the company announced board approvals for its subsidiaries to raise up to Rs 4,500 crore through rights issues.

Mahindra & Mahindra Financial Services Ltd (MMFSL) and Mahindra Lifespace Developers Ltd (MLDL), both subsidiaries of the Mahindra Group, have secured the green light to raise funds via rights issues. MMFSL plans to raise up to Rs 3,000 crore, while MLDL will target up to Rs 1,500 crore, the company said in regulatory filings late Thursday.

M&M has committed to subscribing to the full extent of its rights entitlement in both issues. The company also said it is prepared to absorb additional shares, including any unsubscribed portion, up to the full issue size, pending regulatory clearances and final pricing decisions.

Shares of M&M closed 3% higher on Thursday at Rs 2,840.30 on the BSE. The stock has seen strong performance over the past year, rising 53.18%, though it has faced some short-term pressure, falling 4.65% over the last week.

According to data from Trendlyne, the stock has an average target price of Rs 3,457, implying an upside potential of 21.7% from current levels. Out of 37 analysts covering the stock, 33 have a “buy” rating, two recommend “hold,” and only one suggests “sell.”

The rights issues are expected to strengthen the balance sheets of MMFSL and MLDL, providing fresh capital for future growth and expansion opportunities. In a statement, M&M said, the board has “delegated the authority to certain principal officers of the company inter alia to take a final decision with respect to the Investment in the aforesaid rights issue(s) upon receipt of intimation from MMFSL and MLDL regarding the terms and conditions of the respective rights issue(s) including the issue price.”

Also read | Gold and silver are God's money, follow Rich Dad's 3 rules: Robert Kiyosaki

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

...moreless

...moreless