is a totally unrelated diversification of the company with very little synergies,” said an analyst with a foreign brokerage firm on condition of anonymity.
Added a note from Edelweiss Securities, “Benefits of technology transfer from a luxury car maker to the Indian tractor and utility vehicle maker is questionable.”
However, pessimists on this deal may get allayed following compatriot automaker Tata Motors' recent example where it was successfully able to turn around JLR's operations after acquiring the company in 2007. JLR posted a $487 million profit in second quarter of FY13, up 77% over last year. The news on M&M failed to impress the stock markets. M&M share prices fell 3.37% at the BSE to close at Rs.922.
While some analysts have called the bid expensive, investors are largely believed to be worried on reports that say that M&M may not retain operational control.
“M&M is comfortably placed to finance the deal, but the main worry among investors was a lack of clarity on the deal. Also, there was news about the finance ministry receiving a proposal for higher tax on diesel cars — that will hurt M&M the most,” an analyst from a top broking house said.