Mahindra & Mahindra slips ahead of Supreme Court order on diesel vehicles

Shares of Mahindra & Mahindra (M&M) have slipped 6% to Rs 1,211 on the BSE in otherwise firm market ahead of the Supreme Court decision today that may restrict registration of diesel cars with engine capacity of over 2,000cc, cancel license for 15-year-old vehicles and mandate higher emission norms in Delhi.

The apex court has made significant observation regarding the diesel vehicles, and if imposed, will result in a partial diesel vehicle ban in the city. SC has proposed to disallow registration of diesel vehicles with engine capacity of greater than 2000cc.

Earlier, National Green Tribunal (NGT) came out with an order saying that diesel passenger vehicles will not be registered in Delhi. Also, there will be no renewal of registrations for diesel vehicles more than 10 years old.

The broking firm Angel Broking believes that the above proposals, if implemented, would have a negative impact on M&M as its entire utility vehicle portfolio is above 2,000 cc engine and it would be the hardest hit by the above implementations.

“Maruti Suzuki is unlikely to be materially impacted as it has a portfolio of petrol and compressed natural gas (CNG) cars which the customer can opt for in the event of the diesel ban. Further, commercial vehicle players also will not have impact of the above proposals as the increase in the environment compensation charge is usually a pass thru to the consumer,” broking firm said in a client note.

However, we would require more clarity on the implementation aspect of the above proposals before we make any changes to our recommendation, it added.

At 10:00 AM, shares of M&M were down 5% at Rs 1,222 on the BSE as compared to 0.74% rise in the S&P BSE Sensex.

Mahindra India