Mahindra & Mahindra Sells 30% Stake In Renewable Arm, Share Price Up 3% Today

The share price of Mahindra & Mahindra (M&M) surged around 3% today. Reportedly, the company's renewable energy platform Mahindra Susten has tied up with Ontario Teachers' Pension Plan Board in a strategic partnership. Mahindra Susten reportedly sold its 30% stake for an equity value of Rs. 2,371 crore to Ontario Teachers' Pension Plan Board.

According to the company's statement, "As a result of this transaction, Mahindra Group will receive an inflow of approximately Rs. 1,300 crore (-USD 165 million). Mahindra Group and Ontario Teachers' will jointly explore the sale of an additional 9.99% stake in Mahindra Susten by May 31, 2023. Mahindra Group will deploy these funds, plus an incremental amount of up to Rs. 1,750 crore (~ USD 220 million), into the business & InvIT over the next 7 years."

"This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage & round-the-clock green energy plants," the company added.

Stock performance

This company's share price closed at Rs. 1,283.65, up by 2.68% intra day, at the time of writing. In the past 6 months it has gained 63.84%, and in last 1 year its share price has surged by 73.92%. However, in the last 5 years it has gained by 99.45%. Its 52-week high range is Rs. 1,338, and 52-week low range is Rs. 671.15. This large cap company's market capitalization is Rs. 159,625 crore. Today's highest share price was quoted at Rs. 1,289.45 a piece.

Brokerage recommendation

Recently, ICICI Direct, the top brokerage firm recommends investors to buy the stock of Mahindra & Mahindra (M&M), with a Rs. 1590 a piece. The brokerage firm stated, "We maintain buy on M&M amid continued RoCE focus, proactive approach towards electrification and inexpensive valuations among peers. We expect 23.4% FY22-24E revenue CAGR backed by 24.8% volume CAGR in automotive space; margins seen at 12.7% along with RoE of 15% by FY24. Strong order book in PV business amid innovative and tech enabled new product launches & capex spends to scale up execution capabilities. M&M's stock price has grown at ~14.9% CAGR (Rs. 647 levels in September 2017), outperforming Nifty Auto index in that time."