Mahindra & Mahindra Ltd (M&M) is said to be engaged in top-level negotiations to acquire SML Isuzu Ltd, a domestic player in the light and medium commercial vehicle segment. The proposed acquisition consolidates Mahindra’s presence in the trucks and buses segment, where the auto major has traditionally been comparatively underweight.
Negotiations Underway with Sumitomo Corporation
According to sources close to the development, Mahindra is exploring the possibility of purchasing the entire promoter stake held by Japan’s Sumitomo Corporation, which currently has a 43.96% equity in SML Isuzu. Isuzu Motors of Japan has an additional 15% stake in the company.
Sumitomo’s long-standing intention to sell off its India business, which was first mentioned in mid-2023, seems to be the cause of the move. At the time, JBM Auto had also indicated interest in purchasing Sumitomo’s share, but the transaction fell through.
Valuation and Share Market Response
According to reports, M&M is thinking about purchasing SML Isuzu’s shares for a price between ₹1,400 and ₹1,500. As a result of the speculation surrounding the possible acquisition, SML Isuzu’s stock jumped 3.09%, closing on March 24 at ₹1,703, increasing its market capitalization to about ₹2,500 crore. In the meantime, M&M’s stock ended the day at ₹2,777 after a slight decline of 0.89%.
Board-Level Discussions Expected
M&M’s board is expected to deliberate on this acquisition proposal during a meeting scheduled this week. However, no official statement has been released by the company as of now.
SML Isuzu: A Legacy in Commercial Vehicles
Founded in July 1983, SML Isuzu has become a leader in small and mid-size commercial vehicle production, a segment that is key to India’s intra-regional connectivity and last-mile logistics. Despite having a strong established position, the company has faced financial issues in recent times.
In the December 2024 quarter, SML Isuzu reported a staggering 80.22% decline in net profit, which fell to just ₹53 lakh from ₹2.68 crore in the same quarter the previous year. Its revenue also dipped by 14.07%, reaching ₹331.80 crore compared to ₹386.13 crore in Q3 FY24.
Strategic Rationale for Mahindra
For M&M, the industry leader in personal mobility and heavy commercial vehicles, the acquisition could be a very strategic product fill-in and open the door to SML’s manufacturing capacity, distribution network, and existing market in tier 3 and tier 2 cities. The synergy could also equip Mahindra to compete with its rivals, such as Tata Motors and Ashok Leyland, more aggressively.
Industry Viewpoint
Industry analysts suggest commercial vehicle business is set to recover on infra investment and increasing demand for optimized cargo transport solutions. The SML Isuzu acquisition has the potential to make Mahindra a more credible player in this segment if it can integrate SML’s operations with its electric vehicle strategy.
If the deal happens, it has the potential to become one of the biggest Indian auto industry deals in recent history, a testament to Mahindra’s ambition to become a leader in all mobility segments.
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