Mahindra CIE falls 5.7% following M&M stake-sale report

Mahindra CIE Automotive plunged 5.7 percent in the morning trade on March 13 following reports of promoter Mahindra & Mahindra selling a 4.6 percent stake in the auto ancillary.

At 10.30 am, the stock was trading at Rs 372 on the BSE.

According to a CNBC-TV18 report, the floor price for the stake sale was likely to be set at Rs 355 a share, more than 4 percent lower than the current market price. The base size of the block deal was likely to be Rs 615 crore with a 60-day lock-up period on further sale of shares.

In the quarter ending December 2022, the auto major held a 9.25 percent stake in the auto ancillary, according to exchange data. This was after M&M had reduced its holding by 2.17 percent from 11.42 percent in September 2022.

Over CY22, CIE has increased the stake in Mahindra CIE from 60.8 percent to 65.7 percent and approved the change of name from MCIE to CIE Automotive India. In the fourth quarter (Q4CY22) earnings call, the company’s management had said that the name change will take effect in a few months after all the regulatory approvals were in place.

The steep fall comes after a sharp climb in recent weeks. Mahindra CIE hit a 52-week high of Rs 462.15 after its Q4CY22 results. Its consolidated revenue came in at Rs 2,246 crore with over 34 percent year-on-year (YoY) growth and its PAT from continuing operations more than doubled to nearly Rs 195 crore from Rs 77 crore a year ago. However, after including discontinued operations of its German CV forging business, Mahindra CIE registered a loss of nearly Rs 656 crore, which was a significant drop from a profit of Rs 80 crore a year ago.

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In a March 2 report, ICICI Securities had retained “buy” on the stock with a target of Rs 500. The analysts wrote that the call was “tracking healthy demand outlook, value accretion post selling of its German forging operations; improved financials; order wins in EV space, strong CFO yields (~7%) & healthy double-digit return ratios.”

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