Share prices of Mahindra & Mahindra fell sharply on Wednesday after the Supreme Court imposed a ban on registration of luxury diesel cars till 31 March, 2016, in a bid to reduce pollution levels in the national capital city.
As per the apex court's order, sale of diesel SUVs and luxury cars having over 2,000 cc engine capacity will not be allowed in Delhi through March next year.
The SC order will adversely impact the sales of Mahindra & Mahindra in Delhi as its entire range of utility vehicles have more than 2,000 cc engine capacity.
Responding to the SC ruling, Mahindra Group chairman Anand Mahindra tweeted that the company will comply with the order.
Following the court order, Mahindra & Mahindra stock prices slipped by more than 4% to trade at Rs 1,234.95 on the Bombay Stock Exchange (BSE). Its shares touched a low of Rs 1,2010.80 before paring some losses, while the benchmark BSE Sensex index rose above 200 points.
In contrast, shares of Maruti Suzuki traded higher on the bourses as the SC ban is unlikely to have a significant impact on its sales in the city. Maruti Suzuki shares were up 0.2% to trade at Rs 4,634.
"Maruti Suzuki is unlikely to be materially impacted as it has a portfolio of petrol and compressed natural gas (CNG) cars which the customer can opt for in the event of the diesel ban. Further, commercial vehicle players also will not have impact of the above proposals as the increase in the environment compensation charge is usually a pass thru to the consumer," Business Standard quoted Angel Broking as saying in a note to its clients.
All taxis in the National Capital Region have also been directed by the court to switch to compressed natural gas (CNG) by 31 March, 2016. The new rule will also be applicable to taxi-hailing firms Uber and Ola.