M&M slips nearly 2% on tools-down strike at Igatpuri plant

NEW DELHI: Mahindra & Mahindra Ltd slipped nearly 2 per cent in early trade on Thursday after the company reported that the operations at its Igatpuri plant has been disrupted as the workers have resorted to a tools-down strike.

At 09:40 am, M&M was trading 1.7 per cent lower at Rs 823.25. It has hit a low of Rs 821.75 and a high of Rs 839.92 in trade today.

The Igatpuri plant of MM manufactures engines for the utility vehicles and according to the company, engine inventory at the plant is around 3-4 weeks.

Additionally, the company also has 3-4 weeks inventory of utility vehicles. The utility vehicles accounted for 33 per cent of the company's total sales in FY2013 and are the primary driver of growth for MM, Angel Broking said in a note.

The management is hopeful of resolving the issue at the earliest.

Considering 3-4 weeks of inventory of utility vehicle and another 3-4 weeks inventory of engines, the brokerage firm does not see any major impact of the strike on the company's financials.

MM is trading at 12.3x FY2015 earnings and the Angel maintains their 'buy' rating on the stock with a target price of Rs 1,006.