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The stock of auto major M&M slipped 3.37 per cent on Monday on the BSE following reports of the company is eyeing a major stake in British luxury carmaker Aston Martin.
After recording another lifetime high at Rs 960.95 in early trade, the stock closed at Rs 922.
According to reports, the company has entered into a take over deal with Italian private equity fund for a 50 per cent stake in Aston Martin, owned by Kuwaiti firm The Investment Dar Company (TID). The company that makes cars immortalised by the James Bond movies was sold in 2007 by the US-based Ford Motors for a reported sum of £479 million.
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Edelweiss, while maintaining a buy with a target of Rs 1,027, said that it viewed the move with caution. However, Barclays Capital in its report released on Monday rated the stock as ‘Overweight/Neutral’ with a stock price target of Rs 959.
“Firstly, the obvious cons are the buying/ selling implications and the drag on the overall profitability and return ratios. The pros would include an expansion of the portfolio into luxury cars and access to key technology know-how. In our view, Aston Martin is sub-scale with 5,000 units a year and can be significantly larger, if M&M can pull this off. In the near-term, we expect the stock to remain weak as further details emerge,” added the Barclays report.
Even as the markets reacted to reports of the so called deal, both companies have denied any such development and refused to comment on “speculation.” TID company said it is not selling its stake in the luxury sports car firm. Reacting to reports of the “deal”, a spokesperson of TID said the reports published in some media “are inaccurate and have no truth in it.”
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