M&M Block Deal: Promoter Likely Seller; Shares Worth Rs 2,184 Crore Change Hands

  • Mahindra and Mahindra (M&M) saw a 4% share drop post-block deal, involving a 0.9% stake shift worth Rs 2,184 crore.
  • Promoter group entity, PMSP Ltd, considers selling 0.75% stake to raise $215 million.
  • M&M’s promoter group collectively holds a 19.32% stake, with PMSP owning 11.64%.
  • Family seeks liquidity for specific needs, proposing to sell a portion of PMSL shares.
  • No further share sales planned; a 90-day lock-up for promoters post-transaction.
  • M&M reports a 60% increase in net profit in the December quarter, driven by automotive segment growth.

On March 6, Mahindra and Mahindra (M&M) revealed that the family required liquidity for specific requirements and proposed selling a limited number of the company’s shares held by Prudential Management and Services Private Ltd (PMSL).

Block Deal Impact: M&M Shares Drop Over 4% :

On March 7, Mahindra & Mahindra shares fell by more than 4% to Rs 1,884 following a block trade involving 1.1 crore shares, representing a 0.9 percent holding in the automobile major.

The stakes were sold at a floor price of Rs 1,924 per, for a total transaction value of Rs 2,184 crore.

Promoter’s Stake Sale Considerations :

Moneycontrol reported on March 6 that PMSP Ltd, a promoter group business, was considering selling around 0.75 percent of M&M in a block deal to garner approximately $215 million. According to exchange data, M&M’s promoter group jointly owns 19.32 percent of the company, while PMSP owns 11.64 percent.

Response to Reports :

In response to Moneycontrol’s claim, Mahindra & Mahindra highlighted that once former M&M chairman Keshub Mahindra, who died on April 12, 2023, transferred PMSL shares to his family, funding was sought for specific requirements. The family recommended selling a modest amount of PMSL’s interests in M&M. The statement emphasised that the family will continue its role as M&M’s Promoter Group, with no plans to sell additional shares in the near future. Furthermore, following the purchase, the promoter would be subject to a 90-day lock-up period before any future sales.

Strong performance in the December quarter :

In the December quarter, Mahindra and Mahindra reported a 60% increase in net profit to Rs 2,454 crore over the previous year. This expansion was ascribed to the automotive segment’s strong performance, boosted by a favourable product mix and the benefits of operating leverage.

In summary :

Mahindra & Mahindra’s recent block purchase for shares for Rs 2,184 crore represents a strategic action by the promoter group to meet specific liquidity concerns. Despite the drop in share value following the deal, the company remains hopeful about its future growth, especially after a solid showing in the December quarter.

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