Mahindra & Mahindra to buy Sumitomo's stake in SML Isuzu: Report

Homegrown automaker Mahindra & Mahindra (M&M) is in talks to acquire the entire stake of Sumitomo Corporation in Punjab-based commercial vehicle maker SML Isuzu Ltd, reported CNBC Awaaz.

M&M is eyeing a valuation of ₹1,400-₹1,500 per share for SML Isuzu, the report said, adding that the company's board is likely to meet this week to evaluate the proposal.

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

Although Mahindra & Mahindra is India’s second-largest commercial vehicle manufacturer after Tata Motors, it hasn’t been able to crack the heavy-duty truck and bus market. M&M mostly sells light commercial vehicles and lags behind Ashok Leyland and VE Commercial Vehicles in the heavy-duty truck segment.

Reacting to the news, shares of SML Isuzu rose as much as 8% in intraday trade to hit a high of ₹1785.80 on the BSE. Shares of M&M closed 1% lower on Monday.

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%.