M&M in talks to acquire Sumitomo Corporation's stake in SML Isuzu

Sumitomo holds 44% in SML Isuzu; current stake valued at Rs 1,100 cr; deal may happen at a discount to current trading price

To ink a deal that will enhance the commercial-vehicle (CV) portfolio of Mahindra and Mahindra (M&M), the company is in talks to acquire the stake of the promoter in SML Isuzu, according to sources close to the development.

 

SML Isuzu’s portfolio includes school buses.

 

In December last year, Sumitomo Corporation, the promoter of SML Isuzu, held 43.96 per cent in the company, according to the stock-exchange data.

 

Isuzu Motors (Japan), which makes sport utility vehicles and pickup trucks, holds 15 per cent in SML Isuzu.

 

In March 2024, SML Isuzu’s market capitalisation on the BSE was around Rs 2,500 crore, and 44 per cent at current prices would be valued at about Rs 1,100 crore.

 

 

However, according to reports, M&M is considering a price of Rs 1,400-1,500 per share, valuing the company at about Rs 2,000 crore.

 

Bankers say with a low market share in the CV market, SML Isuzu is unlikely to get a premium on market valuation. Its sales remained flat in 2024-25 with a 0.2 per cent growth rate in April-February.

 

Last month, however, the company saw strong double-digit growth. There was 35.8 per cent growth in passenger vehicles (buses) and a 15.3 per cent increase in cargo vehicles. 

 

M&M is likely to hold a board meeting this month to discuss the matter, sources said. The spokesperson for the company said: “We do not comment on market speculation.”

 

Emails sent to SML Isuzu remained unanswered.

 

The Mahindra Truck and Bus Division gives integrated trucking solutions, such as those for haulage, tippers, and tractor-trailers in the heavy commercial vehicle category, apart from the ones relating to light commercial vehicles (LCVs) and buses.

 

SML Isuzu’s CVs are manufactured at the Chakan plant, which is near Pune.

 

The range of buses and a few LCV (trucks) are manufactured at the Zaheerabad facility, which is in Telangana.

 

M&M has a retail market share of 23.5 per cent in the CV segment, according to the data given by the Federation of Automobile Dealers Associations. This was primarily led by its LCV portfolio.

 

SML Isuzu’s school-bus models are S7, Executive, Hiroi, SML, and Ecomax.

 

Sumitomo Corporation has been looking to exit SML Isuzu for some time. In 2023 there were talks of a stake sale by Sumitomo as part of its broader strategy to exit low-profit businesses. There were discussions with JBM Auto on this.

 

The company, earlier known as Swaraj Mazda, reported sales of Rs 1,627 crore for nine months ended December 31, 2024, up 7 per cent, while profits soared 23 per cent to Rs 68 crore. For 2023-24, the company reported revenue of Rs 2,195 crore with net profits of Rs 107.8 crore, its highest ever.

 

In 2023-24 it had sold 13,797 units of CVs as against 12,442 units in the previous financial year.

 

The SML Isuzu board approved the resignation of Junya Yamanishi, managing director and chief executive officer (effective from April 16) earlier this month.

 

The domestic CV segment has seen a 0.5 per cent decline in retail sales for the year-to-date period.

 

“Dealers pointed to a challenging commercial environment, with weak sales in the transportation sector, tightening finance norms and pricing pressures delaying customer decisions — particularly in bulk orders and institutional contracts. While robust order bookings, notably in the tipper segment driven by increased government spending and steady supplies offered some relief, the prevailing negative sentiment and structural market shifts call for a more adaptive approach. There is cautious optimism that the market will improve in March as dealers recalibrate their targets to better align with current demand,” Fada recently said.