M&M Eyes Expansion in Trucks and Buses Segment
Mahindra & Mahindra (M&M) is in advanced discussions to acquire the entire promoter stake in SML Isuzu, according to a CNBC-Awaaz report on March 24, citing sources. This potential deal is expected to strengthen M&M’s position in the commercial vehicle industry, particularly in the trucks and buses segment.
As per the report, M&M is evaluating a valuation of ₹1,400-1,500 per share for SML Isuzu. If the acquisition proceeds, it could mark a strategic expansion for M&M in India’s competitive commercial vehicle market.
SML Isuzu Stock Gains 5% on Acquisition Buzz
Following the news, SML Isuzu shares surged 5% to ₹1,732 during intraday trading on March 24. The company’s market capitalisation currently stands at ₹2,500 crore.
Key stock performance metrics:
52-week high: ₹2,405
52-week low: ₹1,028
Meanwhile, M&M shares traded 1.5% lower at ₹2,759 on the BSE at 1:10 PM, reflecting mixed investor sentiment on the potential acquisition.
M&M Board to Evaluate Acquisition Proposal
According to CNBC-Awaaz, M&M’s board is likely to meet this week to assess the proposal. However, M&M has declined to comment on market speculation at this stage.
If the deal materializes, it would result in M&M acquiring the entire 43.96% promoter stake held by Sumitomo Corporation, as per exchange data as of December 2024. Additionally, Isuzu Motors holds a 15% stake in SML Isuzu.
SML Isuzu’s Financial Performance Shows Decline
Despite acquisition talks, SML Isuzu’s financial performance has been under pressure, with a significant decline in both net profit and revenue.
For Q3 FY24 (December 2024 quarter):
Net profit declined by 80.22% to ₹0.53 crore, compared to ₹2.68 crore in Q3 FY23 (December 2023).
Sales dropped by 14.07%, standing at ₹331.80 crore in Q3 FY24, compared to ₹386.13 crore in Q3 FY23.
These financials indicate challenging market conditions for SML Isuzu, which could be a key factor in the Japanese promoters’ decision to exit their India operations.
Sumitomo’s Exit Plan and Previous Acquisition Interest
Sumitomo Corporation, the Japanese promoter of SML Isuzu, has reportedly been looking to exit its India operations for some time.
In June 2023, CNBC-TV18 reported that JBM Auto was among the top contenders to acquire SML Isuzu, but no deal materialized. With M&M now leading the discussions, the acquisition could signal a major consolidation move in India’s commercial vehicle market.
Impact on India’s Commercial Vehicle Industry
If M&M successfully acquires SML Isuzu, it would:
Strengthen M&M’s footprint in the trucks and buses market, competing with industry leaders like Tata Motors and Ashok Leyland.
Bring additional manufacturing capabilities, allowing M&M to expand its commercial vehicle portfolio.
Leverage SML Isuzu’s existing dealer network to enhance M&M’s market presence.
With India’s commercial vehicle sector poised for growth, driven by government infrastructure spending and rising logistics demand, this acquisition could be a strategic growth move for M&M in the long term.
