Automobile share falls 8% as promoters plan to sell stake in block deal

 Automobile share falls 8% as promoters plan to sell stake in block deal

According to a report by CNBC, Mahindra & Mahindra Limited (M&M), an Indian multinational automaker that holds a 9.25% stake in Mahindra CIE, has announced that it plans to sell its stake.

The company on Monday announced that it will divest a 6.5% stake in Mahindra CIE through block deals. The deal is expected to be worth Rs 892.6 crore, with shares exchanged at an average price of Rs 365 per share.

On the news, shares of M&M fell about 3 per cent on Monday to end the session at 1,192 rupees. Shares of Mahindra CIE Automotive (NS:MAHN) plunged 7.7 per cent to close at Rs 363 around the same time.

Mahindra CIE Automotive Ltd is engaged in manufacturing and selling automotive components to original equipment manufacturers and other customers in India and overseas.

M&M Ltd is one of the most diversified automotive companies in India with presence in 2-wheelers, 3-wheelers, PVs, CVs, tractors and earthmovers. The Group has a presence in 22 industries and more than 100 countries and operates more than 150 companies on a consolidated basis.

Through its subsidiaries and group companies, the company has a presence in financial services, auto parts, hospitality, infrastructure, retail, logistics, etc.

A look at the financials of Mahindra CIE Automotive Ltd shows that its revenue has declined from Rs 2,723.15 crores in the second quarter to Rs 2,246.84 crores in the third quarter. In contrast, net profit has increased from Rs 171 crores in the second quarter to Rs 194.4 crores in the third quarter.

The company's profitability ratios have improved: ROE increased from 2.24 per cent in FY20-21 to 7.76 per cent in FY 21-22. ROCE increased from 3.95 per cent in FY20-21 to 11 per cent in FY 21-22.

In the last quarter, promoters held 74.96 per cent stake in the company. FII's have marginally increased their stake and currently hold 7.29 per cent in the company.