Shares of Mahindra CIE Automotive surged nearly 9 percent on Wednesday to hit their 52-week high after a 3.2 percent stake or 1.2 crore shares of the company changed hands via block deals in early trade.
As per a report by CNBC-TV18, parent firm Mahindra & Mahindra (M&M) was going to sell a 3.2 percent stake, or 1.2 crore shares, in Mahindra CIE Automotive via a block deal. Post this transaction, M&M has no stake in Mahindra CIE.
The report further informed that the deal was expected to be at a 5-6 percent discount from Mahindra CIE's current market price (CMP). The stock ended at ₹453.20 on Tuesday.
Post the block deal, Mahindra CIE jumped as much as 8.8 percent to its day's high of ₹493. M&M, however, fell 1 percent post this deal.
The Mahindra CIE stock has given multi-bagger returns in the last 1 year, up 152 percent. Meanwhile, it has jumped 38 percent in 2023 YTD, rising in 4 of the 5 months in the current calendar year. The stock has gained over 19 percent in May so far after a 13.6 percent jump in April. However, it shed 17.3 percent in March. The stock also advanced 7.5 percent in February and 14.7 percent in January.
The stock had hit its 52-week low of ₹168 on May 25, 2022.
Earlier this year, in March as well, M&M sold a 6.05 percent stake or 2.28 crore shares of Mahindra CIE Automotive in a block deal for ₹357.39 per share, down 11 percent from its previous close. Post the last sale, M&M's stake in Mahindra CIE Automotive fell from 9.25 percent to 3.19 percent.
"Since CIE Automotive has not incurred any creeping acquisition-led stake increase in this financial year (FY24), we expect them to participate given that they have been vocal about increasing their stake in the company if the opportunity arrives. In the long term, this is positive for the stock as it removes the overhang of M&M selling stake in the company time and again. Given the commitment to growing a high-margin India business and driving efficiencies in the European domain, we hold a positive view of the company. From M&M’s perspective, this was no longer a core investment and hence divestment of the same makes sense. However, given the magnitude of its transaction vs. its own scale, it has minimal financial implications for M&M," said ICICI Direct in a note.
Mahindra CIE is a multi-technology automotive components supplier headquartered in Mumbai. In the December quarter, Mahindra CIE posted a consolidated net loss of ₹657.8 crore against a consolidated net profit of ₹80.2 crore in the year-ago period. Meanwhile, its revenue from operations jumped almost 35 percent to ₹2,246.8 crore in the quarter under review versus ₹1,669.2 crore in the corresponding quarter last year.