Mumbai: M&M (Mahindra & Mahindra)’s pending acquisition of Ssangyong with could benefit the company but the investors are worry about the investments in Korean automaker.
Market analysts believe that several moves at the same time would be a drain on Mahindra’s cash flows and the stock could underperform in the next 18 to 24 months.
Jatin Chawla, sector analyst at India Infoline, said that its venture in to the heavy commercial vehicles segment is an urgent hang over on the stock, more than Ssangyong, Mahindra will invest on Logan car, which is selling after buying out Renaults stake in a joint venture and new two wheeler.
Also the analysts worried that the acquisition would take 2 to 3 years for Mahindra to get profit from the Ssangyong.
Rakesh Rawal, head of private wealth management at Anand Rathi said that he would stay away from the stock for now until he have more precision, for now it looks expensive.
While India still with Euro IV compliant, Ssangyongs SUVs are already Euro V compliant and be Euro VI compliant soon. The company will provide a open market for Mahindra in Middle East, Russia, South America, Europe, Africa and Asia, where Ssangyong exports.
Arun Kejriwal, director with research firm KRIS said that if ventures takes time to deliver revenue to Mahindra then there is no need to worry because Mahindra’s core business is utility vehicles and tractors, which are doing very well.
