Mahindra & Mahindra shares hit a nine-year low of Rs 248, slipping 8% on BSE on Wednesday, fearing that volumes would be affected due to the spread of the coronavirus (Covid-19). Prime Minister Narendra Modi imposed a 21-day national lockout on Tuesday to try to curb the spread of the virus.
The auto company’s shares were trading for the sixth consecutive day and were trading at their lowest level since April 19, 2010. In the past month, they fell 51%, against a 34% drop in the index S&P BSE Sensex and a 37% drop in the S&P BSE Auto index.
On Sunday March 22, the company decided to suspend manufacturing operations in the factories of Nagpur, Chakan (Pune) and Kandivali (Mumbai) with immediate effect from Monday evening in light of increased concern over the spread of Covid -19 in the state. of Maharashtra.
Covid-19, analysts said, will have an immediate short-term negative impact on the auto industry due to declining revenues and slowing business activity.
“Fear of the virus is a real risk for demand and could mean a significant impact on volume if the spread widens in local markets. Our calculations on the back of the envelope suggest that if Q1F21 were to be washed out due to lower retail traffic / lower discretionary spending and that recovery is more gradual at 2H F21, this could mean a reduction of 10 at 15% of revenues on an annual basis for automotive OEMs (original equipment manufacturers), “said analysts at JP Morgan in an industry report.
At 10 a.m., M&M was trading 7% at Rs 249 on BSE, compared to a 0.24% drop in S&P BSE Sensex. The meter saw a slim volume with around 1.7 million shares changing hands on the NSE and BSE until the time of writing.