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The Mahindra and Mahindra (M&M) stock gained about 11.3 per cent last week and touched its one-year high of ₹728 on November 19. There were two triggers. One, on Tuesday last, the company announced its plans to manufacture a new tractor series called ‘K2’. This series will produce about 37 models of light weight tractors on four platforms, across HP segments and cater to domestic as well as international markets. Tractors bring higher profit margins in comparison with passenger vehicles. With the farm economy doing well, the stock has more than doubled since the March lows, thanks to its market leadership position (about 40 per cent share) in tractor sales.
The second reason is the Mahindra group’s plan to list about 10 group companies such as Mahindra Susten (clean tech), Mahindra Powerol (diesel generator), Mahindra Electric Mobility, used-car seller First Choice Wheels over the next 5 to 7 yearsto unlock value. Investors have also been enthused that M&M has been lately reviewing its investments across loss–making entities.
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