CRISIL reaffirms bank facilities and debt instruments ratings of Mahindra & Mahindra Ltd

CRISIL has reaffirmed its 'CRISIL AAA/Stable/CRISIL A1+' ratings on the bank facilities and debt instruments of Mahindra and Mahindra Ltd (M&M).

CRISIL notes that SsangYong Motor Company (SYMC), a subsidiary of M&M, missed payments totalling 60 billion Korean Won (KRW), equivalent to about Rs. 408 crore, on December 14, 2020. These repayments were due on loans totalling 100 billion KRW (about Rs. 680 crore). These select unsecured loans are covered by a guarantee from M&M to the extent not recovered from SYMC. CRISIL's ratings on the facilities of M&M's rating remain unaffected by delay in servicing of the aforementioned loans by SYMC, given that it is expected to be adherent with the terms of guarantees extended on these loans. M&M is expected to discharge its liability towards these guarantees as per the terms agreed with the banks.

M&M had extended guarantees on the aforementioned loans availed by SYMC around the same time of announcing its intention to divest its stake in this entity. M&M has adequate liquidity and resources to honour these guarantees.

The ratings continue to reflect M&M's leadership in the Indian tractor industry and healthy market position in light commercial vehicles (LCVs), with the benefit of diversification also supporting the business profile. The ratings also factor in a strong financial risk profile, supported by a robust balance sheet with low leverage and high financial flexibility. These strengths are partially offset by exposure to cyclicality inherent in the farm equipment (tractor) and automotive (auto) segments, exposure to risks pertaining to acquisitions and investments in subsidiaries/joint ventures (JVs), and decline in market share in the utility vehicle (UV) space over the last few years.

The Covid-19 pandemic has disrupted both the supply chain and end demand in the major segments M&M operates in the initial few months of fiscal 2021. However, demand has picked up since easing of restrictions, while production and distribution is also back on track.

Shares of MAHINDRA & MAHINDRA LTD. was last trading in BSE at Rs.732.05 as compared to the previous close of Rs. 730.05. The total number of shares traded during the day was 147327 in over 2695 trades.

The stock hit an intraday high of Rs. 737.85 and intraday low of 723. The net turnover during the day was Rs. 107801417.

Source : Equity Bulls

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