M&M shares drop 2.5% despite positive market trends

Mahindra & Mahindra (M&M) shares fell by nearly 2.5% today, even as other stocks surged in the market. This decline comes after the company announced a 3% price increase for its passenger and commercial vehicles, starting April 1. The price hike is attributed to rising costs of materials and production. M&M's price increase is not unusual in the auto industry. Other manufacturers like Maruti Suzuki, Tata Motors, and Hyundai have also raised their prices recently due to similar cost pressures. In addition, there are reports suggesting that M&M may acquire a significant stake in SML Isuzu from its promoter, Sumitomo Corporation. This move could strengthen M&M's position in the truck and bus market, where it faces tough competition. However, some investors seem wary of the acquisition's potential costs and challenges, leading to the stock's downturn. Despite the drop, analysts remain optimistic about M&M's tractor business. Brokerages like Citi and UBS have recommended buying M&M shares due to strong performance and expected growth in tractor sales. Overall, M&M has seen a decline of over 11% this year, but its shares are still up about 47% when looking at the past year. As market conditions evolve, the focus will be on how M&M manages the announced price increases and any developments regarding the potential acquisition of SML Isuzu.