Mahindra and Mahindra Slips 6%, Sharpest Fall in 7 Months; Tanks 17% in 2 Weeks
Shares of Mahindra & Mahindra (M&M) experienced a sharp decline of 6% in intraday trading on Friday, February 21, 2025, marking the steepest fall since July 10, 2024. This significant drop has led to a cumulative loss of 17% over the past two weeks. The stock fell to an intraday low of ₹2,653.25, reflecting ongoing market pressures.
Factors Contributing to the Decline
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Tesla’s Entry into the Indian Market Reports suggest that Tesla CEO Elon Musk is considering starting retail operations in India by April 2025, with plans to launch an electric vehicle under $25,000. This potential entry has raised concerns among investors about increased competition in the electric vehicle (EV) segment. The Indian government’s possible reduction of import duties on electric vehicles from 110% to 15% as part of a new EV policy has also added to the market’s unease.
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Rights Issue Announcements On Thursday, M&M announced that its board had approved plans for its subsidiaries, Mahindra & Mahindra Financial Services and Mahindra Lifespace Developers, to raise up to ₹4,500 crore through rights issues. While this move is intended to bolster the subsidiaries’ growth, the announcement has not reassured investors in the short term.
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Technical Indicators M&M’s stock is now trading below all of its key moving averages, including the 200-Day Moving Average (DMA), which is currently at ₹2,871. The Relative Strength Index (RSI) is heading towards oversold territories, currently at 32, indicating that the stock may be oversold.
Analysts’ Outlook
Despite the recent decline, the long-term outlook for M&M remains positive. Out of 37 analysts covering the stock, 33 have a “buy” rating, with an average target price of ₹3,457, implying an upside potential of 21.7% from current levels. The company’s commitment to subscribing to the full extent of its rights entitlement in both issues also signals confidence in its subsidiaries’ growth prospects.
Conclusion
The sharp decline in Mindra & Mahindra’s stock price is primarily driven by concerns over increased competition in the EV segment and the potential impact of policy changes. However, the company’s strategic moves to strengthen its subsidiaries through rights issues and its long-term growth potential suggest that the current market pressure may be a temporary setback. Investors are advised to monitor the company’s progress closely and consider the broader market dynamics before making investment decisions.