Mahindra & Mahindra’s (M&M) share price took a sharp hit on February 21, 2025, plunging over 6% in intraday trading. The drop comes right after the company announced its participation in the ₹4,500 crore rights issue of its subsidiaries—Mahindra & Mahindra Financial Services (MMFSL) and Mahindra Lifespace Developers (MLDL).
While the market reacted negatively, is this a setback or a long-term strategic move? Let’s break it down.
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M&M share price movement
M&M’s share price opened at ₹2,820 on the BSE on Friday, slightly lower than its previous closing price of ₹2,840. However, as the market absorbed the company’s announcement, the stock slid further to an intraday low of ₹2,653.25, marking a 6% decline.
Key stock performance indicators:
| Metric | Value |
| 52-week high (Feb 2025) | ₹3,276.30 |
| Market cap | ₹3.19 lakh crore |
| Decline in last 5 days | 4.56% |
| Decline in last month | 4.95% |
| YoY return | 44.27% |
While a 6% drop is significant, it is essential to assess whether this fall is a short-term reaction or hints at deeper concerns.
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Why did M&M shares fall?
1. Investment in subsidiaries’ rights issue
M&M announced that it will subscribe to the full extent of its ₹4,500 crore rights entitlement and will also take up any unsubscribed portion. This includes:
- Mahindra & Mahindra Financial Services (MMFSL): ₹3,000 crore rights issue.
- Mahindra Lifespace Developers (MLDL): ₹1,500 crore rights issue.
The stock’s decline suggests that investors are worried about the immediate financial impact on M&M’s books.
2. General market correction
The market itself has been volatile, with auto stocks facing downward pressure. This could have amplified M&M’s decline.
3. Government’s potential EV policy changes
Reports suggest that the Indian government may reduce import duties on electric vehicles (EVs), increasing competition from global players. As M&M is heavily investing in its EV segment, this move could impact its pricing and market share.
A closer look at M&M’s subsidiaries
M&M’s investment in its subsidiaries signals confidence in their long-term growth. Let’s take a look at their financial health.
Mahindra & Mahindra Financial Services (MMFSL)
| Metric | Value |
| Standalone revenue (FY24) | ₹13,404 crore |
| Consolidated revenue (FY24) | ₹15,797 crore |
| Standalone net worth | ₹18,157 crore |
| Consolidated net worth | ₹19,933 crore |
| Net profit (Q3 FY25) | ₹899 crore (63% YoY rise) |
| Stage 3 assets (Q3 FY25) | 3.9% (vs. 3.83% previous quarter) |
Despite strong profit growth, MMFSL’s asset quality has slightly weakened, which could be a concern.
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Mahindra Lifespace Developers (MLDL)
| Metric | Value |
| Standalone revenue (FY24) | ₹18.69 crore |
| Consolidated revenue (FY24) | ₹212.09 crore |
| Standalone net worth | ₹1,541.60 crore |
| Consolidated net worth | ₹1,789.84 crore |
While MLDL is much smaller than MMFSL, M&M’s investment indicates a long-term vision for growth in the real estate sector.
What analysts are saying
- Nomura has maintained a ‘Buy’ rating on M&M with a target price of ₹3,681, implying a 30% upside from current levels.
- Of 40 analysts tracking M&M:
- 37 recommend ‘Buy’
- 2 suggest ‘Hold’
- 1 advises ‘Sell’
Valuation comparison
| Metric | M&M (FY27 est.) | Peers |
| EV/EBITDA multiple | 12x | 12-14x |
M&M’s valuation is in line with its competitors, and analysts believe it has strong potential, especially in the EV space.
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The big picture
While the stock fell due to immediate concerns over the rights issue, M&M is still fundamentally strong. The company is making strategic long-term bets by investing in its subsidiaries and the EV market.
If the rights issue delivers growth as expected and the EV segment remains resilient, this dip could be a buying opportunity for long-term investors. However, market volatility and external factors like government policies should be closely monitored.
