|Hot Pursuit||Monday, June 29, 2009 12:07 Hrs IST|
M&M accelerates on strong response to Mahindra Holidays IPO
The news about pricing of the initial public offer (IPO) hit the market during trading today, 29 June 2009
Meanwhile, the BSE Sensex was up 58.76 points, or 0.40%, to 14823.40.
On BSE, 57,329 shares were traded in the counter. The scrip had an average daily volume of 1.93 lakh shares in the past one quarter.
The stock hit a high of Rs 709 and a low of Rs 695.15 so far during the day. The stock had hit a 52-week high of Rs 824 on 12 June 2009 and a 52-week low of Rs 235.50 on 3 December 2008.
The stock had outperformed the market over the past one month till 26 June 2009, rising 14.24% as compared to the Sensex's 8.65% gain. It had also outperformed the market in the past one quarter, soaring 81% as against the Sensex rise of 47.60%.
India's largest tractor maker by sales has an equity capital of Rs 278.82 crore. Face value per share is Rs 10.
The current price of Rs 703 discounts the company's year ended March 2009 EPS of Rs 31.82, by a PE multiple of 22.09.
The IPO of Mahindra Holidays & Resorts India, representing about 11% the post-issue paid-up capital, comprised a fresh issue of 58.9 lakh shares and an offer for sale of 33.6 lakh shares by Mahindra & Mahindra (M&M)
Mahindra & Mahindra held a 93.64% stake in Mahindra Holidays & Resorts India before the IPO. M&M garnered Rs 101 crore by selling part of its stake in Mahindra Holidays. The IPO was subscribed nearly 10 times.
Mahindra Holidays & Resorts India is a leading leisure hospitality provider in India. The company provides family holidays primarily through vacation ownership memberships. Currently, Mahindra Holiday & Resorts has 11 owned resorts with 937 cottages/apartments, 12 resorts with 252 cottages/apartments on long-term lease, and five with 72 cottages/apartments on short-term lease (less than two years). Of the long-lease resorts, two resorts are in Thailand. Currently, the occupancy is 75%, of which 6% are non-members.
Mahindra & Mahindra's net profit rose 89.1% to Rs 418.07 crore on a 15.2% rise in sales to Rs 3619.18 crore in Q4 March 2009 over Q4 March 2008. The Q4 March 2009 earnings include a government grant in the form of a tax refund of Rs 17.9 crore, the automaker said in the statement.
M&M has decided to exercise an option under Accounting Standard 11 by which it is not required to provide for exchange differences arising from foreign currency loans. This helped it save Rs 166 crore while a gain of Rs 34 crore from sale of its stake in Swaraj Mazda only improved the bottomline.
Income from businesses other than manufacturing automobiles more than tripled to Rs 61.43 crore, helped by dividends from subsidiaries, M&M said.
During the Q4 March 2009, Mahindra & Mahindra's (M&M) utility vehicles sales rose 12% from a year earlier to 48,088 units, though sales of tractors fell 2.3%. The president of its automotive division, Pawan Goenka, said Mahindra expected to outperform the broader market this year.
M&M, which aims to enter the US market with a pick-up truck and sport utility vehicle early next year, has planned capital expenditure of Rs 2000 crore in 2009/10 (April/March), most of which would help expand capacity at its plant in Chakan in western India. This would effectively double Mahindra's production capacity to 600,000 units by the end of the current fiscal year.
M&M had on 5 March 2009 repurchased 65 zero coupon foreign currency convertible bonds (FCCBs) due 2011. Each FCCB is worth $100,000, aggregating to $6.5 million. Earlier in January 2009, M&M had bought back 40 FCCBs at a discounted price of $1,00,000 each, aggregating to $4 million. Buyback of FCCBs would help reduce interest costs.
Mahindra & Mahindra manufactures automobiles, farm equipment and automotive components. The company's automobile products include light, medium and heavy commercial vehicles, jeep type vehicles and passenger cars. Mahindra & Mahindra also manufactures agricultural tractors, agricultural implements, internal combustion engines, industrial petrol engines, spare parts and machine tools.
The promoters of Mahindra & Mahindra have pledged 1.76 crore shares, or 6.32% equity of the company with lenders. The total promoter holding in the company is 29.20% (as on March 2009).