M&M rises post price hike of utility vehicles

Moneycontrol Bureau

Mahindra & Mahindra shares reversed early losses and rose over 1.5 percent on Friday, boosted by the price hike it took to offset the hike in excise duty announced in the Budget. Finance Minister P Chidambaram surprised automakers when he announced a hike in excise on non-taxi sports utility vehicles to 30 percent from 27 percent in the Union Budget for 2013-14. M&M, India's largest utility vehicle maker, late on Thursday announced it would raise prices by 2.4 percent across its vehicles, except the compact UV Quanto. Utility vehicles have seen strong this financial year, even as the overall passenger vehicle industry saw sluggish growth. Analysts say the price hike won't affect growth much going ahead. "The immediate increase in prices by the company is on the expected lines and has been undertaken to protect margins. We don't see a material impact of the recent price hike on the company's volumes and expect them to grow at a healthy rate of 12 percent in FY14," Angel Broking said. The brokerage has a "buy" rating on the stock. JP Morgan, meanwhile, feels the hike in duty would impact demand for companies like M&M and Tata Motors. On the other hand, the increased allocation for rural development schemes in the Budget would boost demand for companies like M&M, who have a sizeable rural exposure, it feels. M&M shares were up 1.4 percent at Rs 885.80 on NSE in noon trade. The stock had hit a 52-week low of Rs 862.25 earlier in the day. Nachiket Kelkar
nachiket.kelkar@network18online.com