Thursday | May 29 2025 | 10:11:46 AM
In a major move to boost its commercial vehicle (CV) business, Mahindra & Mahindra (M&M) has signed an agreement to acquire a majority stake in SML Isuzu. The company will buy 58.96 per cent of SML Isuzu at a price of Rs 650 per share, involving a total investment of Rs 555 crore.
The deal marks a significant step in M&M’s strategy to become a stronger player in the commercial vehicles market, particularly in the above 3.5-tonne (T) segment where it currently holds just a 3 per cent market share.
As part of the acquisition plan, M&M will buy the 43.96 per cent stake held by SML’s promoter, Sumitomo Corporation, and an additional 15 per cent stake held by Isuzu Motors, one of SML’s public shareholders. In line with regulatory requirements under SEBI’s takeover rules, Mahindra will also launch an open offer to purchase up to 26 per cent additional shares from public shareholders.
The entire transaction is subject to approvals from regulatory bodies, including the Competition Commission of India, and is expected to be completed within 2025.
Kotak Investment Banking is acting as the financial advisor to Mahindra and will also manage the open offer. Legal advisory for the transaction was provided by Khaitan & Co.
Doubling Market Share and Long-Term Growth Plans
The acquisition will immediately help Mahindra double its market share in the above 3.5T commercial vehicles segment from 3 per cent to 6 per cent. The company has ambitious plans to further expand this figure to 10–12 per cent by FY31 and to over 20 per cent by FY36.
M&M already dominates the sub-3.5T light commercial vehicles (LCV) space with a strong 52 per cent market share. However, it has long been looking to strengthen its position in heavier trucks and buses where competition is intense.
Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, M&M, said, "SML brings a strong legacy, a loyal customer base, and a credible product portfolio that complements Mahindra’s existing offerings in the trucks and buses segment. This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles."
What SML Isuzu Brings to Mahindra
SML Isuzu is a well-known brand in the Indian trucks and buses market, incorporated in 1983. The company has a strong presence across India and specialises in Intermediate Light Commercial Vehicles (ILCVs), particularly in buses, where it commands a 16 per cent market share.
In FY24, SML Isuzu reported revenues of Rs 2,196 crore and an EBITDA (earnings before interest, taxes, depreciation, and amortization) of Rs 179 crore. The company has built a reputation for frugal manufacturing, profitable operations, and strong engineering capabilities.
M&M sees significant synergy opportunities through this acquisition — in areas like cost optimisation, network expansion, brand strength, manufacturing efficiencies, talent sharing, and complementary product portfolios.
Dr. Anish Shah, Group CEO and Managing Director of the Mahindra Group, said, “The acquisition of SML Isuzu marks a significant milestone in the Mahindra Group’s vision of delivering 5x growth in our emerging businesses. It is aligned with our capital allocation strategy of investing in high-potential growth areas with a strong right to win."
Strategic Benefits of the Deal
With SML Isuzu under its belt, Mahindra aims to build a full-range commercial vehicle portfolio, covering everything from small trucks to large heavy-duty trucks and buses. The plan is to consolidate platforms, create a unified supplier and dealer network, and improve plant utilisation to drive operating efficiencies.
The Trucks and Buses Division of Mahindra has already made steady progress in the last few years. With the addition of SML’s strong presence in the ILCV segment, Mahindra expects to accelerate its growth journey.
What Happens Next?
The deal is pending approval from the Competition Commission of India and the successful completion of the open offer to public shareholders. If all approvals are secured, Mahindra expects the acquisition to be fully closed within this year.
Once completed, the acquisition could reshape the competitive dynamics of India’s fast-growing commercial vehicle market, positioning Mahindra as a much stronger player against rivals like Tata Motors, Ashok Leyland, and VE Commercial Vehicles.
