M&M likely to raise up to $500 million for EV drive — stock drops amid market sell-off

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Mahindra and Mahindra’s (M&M) shares were trading in the red on Friday even as the report suggests the automaker may raise up to $500 million for its electric vehicles.

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Mahindra and Mahindra’s (M&M) shares were trading in the red on Friday even as some reports suggest the automaker may raise up to $500 million for its electric vehicles.

M&M shares were trading 3.6 percent lower from the previous close at Rs 1,263.20 on BSE at 11:36 am. While the shares of the carmaker are down amid a broader market sell-off, in the past six months, they have made investors 65 percent richer as against the benchmark Sensex which has risen 1.5 percent during the period.

M&M is in talks with global investors to raise between $250 million and $500 million to accelerate its plans to build EVs, sources told CNBC-TV18. The talks have been on with several investors ever since the signing of a binding agreement with British International Investment (BII).

The company is reportedly in talks with global green funds and private equity firms as it is looking for a long-term investor who can help build out its EV business. Meanwhile, banking industry sources cited by Reuters say a few investors have in recent months shown interest in participating in a funding round worth around $800 million.

“Mahindra wants to bring a benchmark investor onboard but does not want to dilute a large stake at present,” a source told news agency Reuters. He also clarified that the plans are at an early stage and subject to changes.

It was not immediately clear what valuation the investors are offering or what the company is seeking for the new round, the news agency reported.

The developments come weeks after M&M announced its plan to launch five new electric Sports Utility Vehicles (SUVs) for both domestic and international markets, with the first four expected to hit the road between 2024 and 2026. The new e-SUVs include the XUV.e8, XUV.e9, BE.05, BE.07 and BE.09.
The SUV models would be introduced under two brands – XUV and the all-new electric-only brand called BE. Legacy brands will come under XUV brand while the all-new electric model would be rolled out under the BE lineage, the Indian auto major said.

Market expert Anand Tandon expects more upside in the carmaker’s stock because the new SUV range has done reasonably well and there is a huge waiting list. The acceptance in the market has been very high and that will finally translate into the numbers, he said.

“The EV push is also useful because without it most companies will be dying. You will be getting to EV sooner than most people expect. So, over the next 10 years, the market will completely change. Therefore, the earlier the better,” he told CNBCTV18.com.

According to Tandon, the fact that the firm is able to raise money is a good thing because typically Mahindra Group has not been great in terms of asset allocation within the group and that has been improving.

He, however, believes that the stock is not very cheap at the current level but among other players in the auto sector, it still seems to have the best trajectory of growth.