Mahindra & Mahindra Ltd. said that it does not expect to raise further stakes in private sector lender RBL Bank Ltd. unless it sees compelling strategic value.
"While we have mentioned that we may consider increasing our stake to 9.9%, we do not expect to invest more unless we see compelling strategic value at some point in the future," its management said during a media briefing after the Q1 results on Friday.
The automaker recently acquired a 3.53% stake in RBL Bank for Rs 417 crore. At that point, the company also mentioned that it may increase the stake further.
The primary purpose of acquiring this stake is to understand banking, the company said. Through this, the automaker aims to enhance the value of its financial services business.
"The investment is based on a long-term view (7–10 years) ... We saw an opportunity with an attractive valuation at less than 1 times P/B for a very solid bank with a strong management team," M&M said in the statement.
The company also expects to explore its potential for synergies.
Even though M&M previously mentioned its intention to raise stakes in RBL Bank at some point, it wouldn't have been possible without permission from the Reserve Bank of India.
At present, the company's financial services business is a core area, and Mahindra Financial Services Ltd. has a valuation of close to Rs 40,000 crore, the company said.
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