Credit Analysis & Research (CARE) reaffirmed 'AA+' ratings to Mahindra & Mahindra's (M&M) long-term bank facilities of Rs 1.78 billion. CARE reaffirmed 'A1+' ratings to the company's short-term bank facilities of Rs 717.2 million.

The reaffirmation of the ratings assigned to the bank facilities of M&M continues to factor in the experience of the promoters and management and, the company's dominant position in the Utility Vehicle (UV) (market share of 41.1% as on December 31, 2013) and Farm equipment (FE) (market share of 41.4% as on Dec. 31, 2013) segments, its established brand image, diversified product portfolio, strong dealer and after-sales service network and its global presence. 

The ratings positives also factor in M&M's healthy debt coverage and liquidity indicators derived from the liquid investments, favourable working capital cycle with strong accruals from its operations. The rating strengths are, however, tempered by the company's high exposure to its group companies, slowdown in the automobile sector with stiff competition in the sector especially in the UV segment and the inherent cyclicality risk in the automotive and FE businesses. 

Maintenance of the profitability margins in the wake of the slowdown being faced by the UV segment currently and the performance of its loss making subsidiaries are the key rating sensitivities.

For arriving at the ratings, CARE has combined the business and financial risk profiles of M&M and its subsidiaries in the auto and tractor segments, which M&M considers as its core businesses. 

Shares of the company gained Rs 22, or 2.26%, to settle at Rs 997.35. The total volume of shares traded was 41,218 at the BSE (Thursday).