M&M to increase its stake in SYMC by ~3% to 73% - Angel Broking

Mahindra and Mahindra (MM) has announced that it will increase its stake in Ssangyong Motor (SYMC) by subscribing to new shares being issued by SYMC. The SYMC board has approved to increase the paid in capital of the company by KRW80bn by issuing 14.5mn new shares to MM at a price of KRW5,500/ share, which is at a discount of ~13% to SYMC's closing price on February 14, 2013. With the subscription to the additional shares, MM's stake in SYMC which currently stands ~70% will be increased by ~3% to ~73%.

We see the capital infusion as a positive development for SYMC as it will strengthen the company's financial position and more importantly it will enable the company to invest in its product development plans for the future. As far as MM is concerned, the fresh capital infusion into SYMC reinforces its strong commitment towards SYMC and its resolve for an early turnaround.

We maintain our Accumulate rating on MM with a SOTP based target price of Rs. 1,019.

Source : Equity Bulls

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