Shillong, July 27: Mahindra & Mahindra (M&M) group stocks experienced selling pressure and emerged as the top Sensex losers on Thursday. M&M’s shares slumped 6.5 percent following the company’s announcement of an equity stake purchase in RBL Bank.
In the previous day’s announcement, M&M revealed its acquisition of a 3.53 percent stake in RBL Bank as an investment worth Rs 417 crore. The company stated that it might consider further investment, but it will not exceed 9.9 percent, subject to pricing, regulatory approvals, and required procedures.
RBL Bank, in response, communicated that M&M Limited holds a 3.53 percent stake in the bank’s total paid-up share capital, according to the last beneficiary position received from the depository (NSDL) as of July 21. The bank clarified that no pre-approval is required for trading in its shares, except for shareholders seeking to acquire 5 percent or more of the bank’s shareholding, as per RBI’s (Reserve Bank of India) guidelines.
News agency IANS stated that Tech Mahindra also faced a decline of over 3 percent in its share value after disappointing Q1 results. The IT major’s revenue decreased by 4.2 percent QoQ (in constant currency) to $1.6 billion, missing expectations of a 2.5 percent decline, as reported by Motilal Oswal Financial Services. The company’s profitability also suffered due to a 200 basis points one-time impact from a client’s bankruptcy. The report predicts an improvement in Tech Mahindra’s profitability from Q2 onwards through stringent cost control and headcount cuts, despite high utilization.
Emkay Global Financial Services noted a 4 percent QoQ (4.2 percent CC) slump in Tech Mahindra’s revenue to $1.6 billion, below their estimates. EBITM also declined by 440 basis points QoQ to 6.8 percent, even after adjustments for one-offs. Deal wins remained weak, standing at $359 million, with a YoY decrease of 25 percent in TTM deal-intake.