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The stock is also the biggest laggard on the Nifty Auto index, marking its biggest single-day drop in four months.
As part of the India-European Union Free Trade Agreement, the European Union is likely to gain ground in sectors such as auto and technology products, while Electric Vehicles, Internal Combustible Engines (ICE) and Heavy Commercial Vehicles will have a separate quota.
Duty on import of cars from the European Union will fall to between 30% to 35% from 66% to 110% respectively. India will also cut in-quota duty over five years, which will eventually fall to 10%.
On the flip side, India's export quota for cars to be 2.5x than the EU, with those cars getting duty-free access.
According to a note by brokerage firm Goldman Sachs, the impact of this is most on brands with high-volume presence in the premium executive and luxury segments, or in the ₹23.2 lakh-plus price range.
For Mahindra & Mahindra, Goldman Sachs sees a 1.9% impact on the company's profitability, as it has s significant exposure to this segment via models such as the XUV700 and the Scorpio.
It must be noted that the India-EU FTA will only take effect from 2027 as legal proceedings, ratification process needs to be completed.
Mahindra & Mahindra has not officially clarified about the overall impact of the deal on its financials.
Shares of Mahindra & Mahindra are back to the lows of the day, currently trading 5.6% lower at ₹3,351.6. The stock had recently hit a record high of ₹3,839.9, and is down 5% in the last one month.
