SC's decision on registration of big engine vehicles in Delhi may affect Mahindra & Mahindra

Different government bodies are trying to control the pollution level in the Capital of the country with different measures. On December 11, the National Green Tribunal ordered the banning registration of all diesel vehicles in Delhi until January 6, keeping in sync with the odd and even plate traffic formula passed by the ruling party in Delhi Aam Aadmi Party (AAP) which received the  support of the Chief Justice of india (CJI) T S Thakur. With this, the Supreme Court on Wednesday banned registrations of more than 2000 cubic centimeter (cc) diesel vehicles in Delhi and the National capital region(NCR) for 3 months commencing  January 1.

According to the research of World Health Organization the capital of the country is the most polluted city in the world. It has highest particulate matters of 2.5. Delhi is also the largest passenger vehicles market in India. So almost every automobile company operating in India will hit from the verdict of Supreme Court.

However this decision has hit India's largest utility vehicle manufacturer Mahindra and Mahindra (M&M) as almost half of the portfolio of M&M consist of more than 2000cc diesel vehicles. The company generates around 95 percent of revenue from this segment. Some of the company's best sellers in the passenger vehicles segment  like Scorpio, Bolero, Xylo all belong to this category.

Though the NCR does  not make a large percentage of national sales of the company, the impact of the news will be huge in other states also given that there is a possibility of a ban on diesel vehicles in other states of the country also. With M&M many companies invested in Diesel technology to reduce pollution. These technologies can also get affected as at the end there can be no ripping benefit of the whole research.

With M&M Mercedes-Benz will be the one which will be the most affected as its entire range has engines more than 2 litres and 15 per cent of its sales comes from NCR.  Other companies like TATA, Chevrolet, Hyundai, Toyota are likeky to be affected as each one has one or two passenger vehicles running in this segment.

On the financial front for the first time after 2012, the company's sales for fiscal 2016 broke into the positive territory in November. The current news will affect the sales pushing the numbers in the  negative territory.

The stock of the company is trading at Rs.1235.20, a decrease of 4.18 percent from the previous close.