Current Market price declined to Rs. 142.50 EOD 24 July 2020 compared to Rights offer price of Rs. 50.
With the coronavirus outbreak hitting the economy hard, many companies are taking to rights issues to raise funds.
Mahindra & Mahindra Financial Services ltd plans to raise Rs 3,500 crore and will issue 61,77,64,960, fully paid-up equity shares of the face value of Rs 2 each at Rs 50 per share for the same
Shares of Mahindra & Mahindra Financial Services (MMFSL) were up 12 per cent to Rs 234 in the intra-day trade on the BSE after the company said its board approved a 1:1 rights issue at Rs 50 per share, amounting to Rs 3,089 crore.In a separate regulatory filing, Mahindra & Mahindra (M&M), the promoter of the company informed the stock exchanges that the loans and investment committee of the Company has approved to subscribe to the equity shares of MMFSL to the full extent of the Company’s rights entitlement.
The board of M&M ltd also approved to subscribe to additional shares as well as to any unsubscribed portion of the rights issue, up to the total Issue size of MMFSL subject to compliance of applicable laws including the minimum public shareholding requirements, it said.
Promoter of Mahindra & Mahindra Financial Services ltd
Mahindra & Mahindra ltd
Rights Issue Particulars of Mahindra & Mahindra Financial Services ltd
The record date : July 23, 2020.
Open on July 28
Close on August 11, 2020.
Ratio : 1: 1
Offer price : Rs. 50 per Share
The full amount of the issue price will be payable on application.
Total Amount to be raised : Rs. 3089 Cr
Performance of M&M Financial Services ltd
MMFSL reported a profit after tax (PAT) of Rs 159 crore, up 128 per cent against Rs 684 crore in the year-ago quarter. Net interest income (interest earned less interest expended), however, grew 8.7 per cent year-on-year (YoY) to Rs 1,376 crore from Rs 1,266 crore in the previous year quarter.
The company’s pre-provisioning operating profit (PPoP) up 44.2 per cent YoY at Rs 843 crore as opex declined 38 per cent YoY to Rs 350 crore. The decline in opex was largely driven by 47 per cent YoY decline in other expenses. In addition, a 2 per cent sequential decline was seen in headcount.
With 40 per cent collections from moratorium customers in July, the initial trend is encouraging. However, the key monitorable would be whether collection efficiency has reached pre-Covid-19 levels post the lifting of the moratorium in September. With the rights issue, leverage is likely to decline to 4.1 times, which we believe is enough to absorb any potential asset quality shocks,
Face Value Rs. 2 per share
Net Asset Value prior to Rights issue : Rs. 183.96
Price to Book Value : 1.25
EPS TTM Rs. 14.67
PE Ratio : 15.65
On 21 July 2020 at 10.46 am, M&M Financial Services was up 2.24 per cent at Rs 224.75 on the NSE.
Share Holding Pattern Prior to Rights Offer
Promoters : 51.19%
FII : 23.52%
DII : 19.19%
Others : 6.10 %
Registered Office of M&M Financial Services ltd
Gateway Building, Apollo Bunder,,
Guidance : Whether the shareholders should apply to this offer and what is the potential of return will be discussed on 22 July 2020 evening note.