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.
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.
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.
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.
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.
