Mahindra & Mahindra (M&M) clarified that it currently has no plans for a demerger of its auto and tractor businesses. This came after a report by Economic Times claimed the Indian automaker is evaluating a restructuring plan that could separate its tractors, passenger vehicles (including EVs), and truck operations into independent entities.
"The Company has clarified this in the past and maintains that it sees much greater value from synergies by keeping these businesses within the M&M entity," M&M said in an exchange filing on October 9.
What the report said:
The report by Economic Times said that the internal discussion which are at a preliminary stage, aim to assess the feasibility of turning M&M’s core divisions into standalone units. Both the automotive and farm equipment businesses have grown strongly over the past five years, reinforcing Mahindra's position in SUVs and tractors.
"The focus is to be future-ready and make all businesses independent. That helps unlock the business potential and helps scale," the report cited a senior executive close to the development as saying.
Tata Motors demerger:
The latest speculation comes after Tata Motors' recent separation of its passenger and commercial vehicle units. The demerger of Tata Motors, effective October 1, will separate the automotive major’s commercial vehicle (CV) and passenger vehicle (PV) businesses into two independent listed companies.
Those holding shares of Tata Motors on October 14, the record date, will get one equity share of the new CV company for every one share they hold in Tata Motors. TML Commercial Vehicles Ltd is expected to list by early November.
M&M share price history:
M&M shares were trading in the green with marginal gains. The stock was up more than 0.5 percent to trade at Rs 3,445 apiece, as seen at 2.37 pm. The shares of the company have fallen more than 7 percent in the past one month, but gained over 36 percent in the past one month. Its P/E ratio currently stands at over 32.
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