Mahindra shares rally as SML Isuzu acquisition fuels expansion in heavier CV segment

Shares of Mahindra & Mahindra (M&M) started the day on strong note, rising as much as 2.8% to hit a high of ₹2,945 on the NSE. The stock opened firmly higher at ₹2,918.90, up 1.9% over its previous close of ₹2,864.20. The auto stock is currently trading at ₹2,884.50, up 0.71% from its previous close.

The auto heavyweight got momentum after M&M signed a deal to acquire a 58.96% stake in SML Isuzu for ₹555 crore, strengthening its push into the commercial vehicle segment above 3.5 tonnes.

Mahindra on Saturday announced the acquisition of a majority stake of 58.96% in SML Isuzu (SML) for ₹555 crore, as a move to bolster its presence in the commercial vehicle (CV) segment. The acquisition marks a significant push by M&M to expand beyond its dominant sub-3.5 tonne light commercial vehicle (LCV) market. Post-acquisition, M&M will launch a mandatory open offer under SEBI’s takeover regulations to acquire up to an additional 26% stake from public shareholders.

As part of the deal, M&M will acquire a 43.96% stake from Sumitomo Corporation and 15% from Isuzu Motors. The transaction is subject to regulatory approvals, including from the Competition Commission of India (CCI), and is expected to close within 2025.

Currently, M&M commands a 52% market share in the sub-3.5T LCV category but holds only 3% in the >3.5T segment. With SML's integration, the company expects to double its share in the heavier CV segment to 6% initially, targeting 10–12% by FY31 and over 20% by FY36.

SML Isuzu, incorporated in 1983, is a listed player in the truck and bus space with a 16% share in India’s intermediate and light commercial vehicle (ILCV) bus segment. The company reported operating revenue of ₹2,196 crore and an EBITDA of ₹179 crore in FY24.