Ashok Leyland shares jump 4%; CV maker denies SML Isuzu stake purchase report

Shares of Ashok Leyland Ltd rose 4% in intraday trade on Wednesday after a media report said that the Hinduja Group’s flagship company is looking to buy Sumitomo Corporation’s stake in Punjab-based commercial vehicle maker SML Isuzu.

Ashok Leyland said it would like to outrightly deny this news as factually incorrect.

Ashok Leyland is hosting a conference call for analysts and investors on March 26 from 5.15 pm to 5.45 pm to provide corporate updates emanating out of the board meeting to be held earlier in the day called at shorter notice.

Sumitomo Corporation held around 44% stake in SML Isuzu at the end of the December quarter.

Meanwhile, shares of SML Isuzu too jumped as much as 6% to hit a ₹1,698 on the BSE.

The Hinduja Group company is India’s third-largest commercial vehicle manufacturer after Tata Motors and Mahindra & Mahindra (M&M). It sold 1.66 lakh CVs in the calendar year 2024, cornering a 16.5% market share in the segment, according to data shared by the Federation of Automobile Dealers Associations (FADA). However, Ashok Leyland is ahead of M&M in the Medium & Heavy Commercial Vehicles segment.

SML Isuzu sold 11,617 trucks and buses in the calendar year 2024, making it the eighth-largest commercial vehicle maker in the country. It is a major player in the school bus segment.

Chandigarh-based SML Isuzu was incorporated as Swaraj Vehicles Ltd in 1983. It was renamed Swaraj Mazda a year later following a technical agreement with Japan’s Mazda Motor Corporation. In 2005, Punjab Tractors offloaded 15% of its equity stake in Swaraj Mazda in favour of Japan’s Sumitomo Corporation. Mazda Motor Corporation also offloaded 15% of its equity holding in favour of Sumitomo Corporation. By 2009, Sumitomo raised its stake in the company to 53.5% by buying the entire equity holding of Punjab Tractors. In 2011, Swaraj Mazda was renamed as SML Isuzu.

Last week, SML Isuzu’s board approved the resignation of Managing Director & CEO Junya Yamanishi effective from April 16, 2025. The company’s board also approved the appointment of Yasushi Nishikawa as Managing Director & CEO of the Company with effect from April 17, 2025 for a period of five years.

Nishikawa has a global experience of over 38 years with Sumitomo Corporation in countries such as Japan and Mexico. Nishikawa joined Sumitomo Corporation, Japan in April 1986 and since then has held several positions in various departments.

Credit rating agency ICRA expects the domestic commercial vehicle (CV) industry’s wholesale volumes to witness a growth of 3-5% year-on-year in FY26, demonstrating some recovery. This follows a flat volume movement estimated in FY2025, marred by the demand slowdown in the first half of the fiscal due to the General Elections. Among the various sub-segments, the M&HCV (trucks) wholesale volumes are likely to grow by 0-3% YoY in FY2026 after seeing a flattish growth or marginal contraction in FY2025. The resumption of construction and infrastructure activities is likely to aid the low YoY volume increase in FY2026. The segment reported a 7% contraction in the first nine months of FY2025, with the tipper volumes contracting by 11%, and the haulage and tractor-trailer sub-segments each declining by 5%.

The story has been updated with Ashok Leyland's comments.