Mahindra to buy nearly 59% stake in SML Isuzu for Rs 555 crore at deep discount

Time of India

26-04-2025

Mahindra & Mahindra has agreed to acquire a 58.96% stake in commercial vehicle maker
SML Isuzu Ltd
for Rs555 crore, or at Rs650 a share, a massive discount to the company's last stock price of Rs1,766.70 on the BSE.
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Mahindra will acquire the entire 43.96% held by SML promoter
Sumitomo Corporation
and another 15% from
Isuzu Motors
Ltd, a public shareholder, the automaker said on Saturday. It will also make an open for at least a 26% stake at Rs 1,554.60 a share.
SML had been looking for a buyer for the last couple of years.
The proposed acquisition is a step towards establishing a strong presence in the 3.5-tonne-plus commercial vehicle segment, where M&M has a 3% market share, as compared to a 52% market share in the under 3.5-tonne light commercial vehicle segment, the company said. M&M's Trucks and Buses Division has made meaningful progress over the past few years, it said.
This is M&M's second acquisition in the commercial vehicle business and the first major deal by the auto business since Anish Shah took charge as the group managing director and chief executive in 2021. Mahindra bought out the stake of US truck maker Navistar in their India joint venture in February 2013. The acquisition paved the way for the company's entry into the heavy-duty truck segment.
'The acquisition of SML Isuzu marks a significant milestone in Mahindra Group's vision of delivering 5x growth in our emerging businesses. This acquisition is aligned with our capital allocation strategy for investing in high-potential growth areas which have a strong right to win and have demonstrated operational excellence,' said Shah.
Mahindra expects the acquisition to double its market share to 6%, with a plan to increase this to 10-12% by FY31 and 20%+ by FY36, the company said.
Incorporated in 1983, SML Isuzu has a pan-India presence in the trucks and buses segment, it said. SML has a market share of 16% in the intermediate light commercial vehicle bus segment. It reported operating revenue of Rs2,196 crore and Ebitda of Rs179 crore in FY24. "It has profitable operations, frugal manufacturing and strong engineering capabilities," Mahindra said.
In the nine months ended on December 31, 2024, SML's revenue from operations increased to Rs1,627 crore from Rs1,516.33 crore a year earlier.
SML offers significant potential to unlock value through synergies in cost, network, brand, manufacturing, talent and product complementarities, Mahindra said. "Our trucks and buses business has developed strengths by tapping into technology, design & innovation, and sourcing from our auto business. Together, this would be a powerful combination,' Mahindra said.
This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage through platform consolidation, a unified supplier and network base, and better plant utilization. Together, we are well-positioned to scale rapidly and drive profitable growth,' said Rajesh Jejurikar, executive director, Auto and Farm Sector, at the firm.
Kotak Investment Banking is acting as the financial advisor to M&M and manager to the open offer. Khaitan & Co acted as legal advisor to M&M.