SML Isuzu’s share price rallied 6 per cent to ₹1,710 on the National Stock Exchange (NSE) in an otherwise range bound market. Today’s up move in the stock price of SML Isuzu came on the back of reports that Ashok Leyland is in advanced talks to acquire a majority stake in the commercial vehicles company, potentially buying out Sumitomo Corporation’s 44 per cent stake and Isuzu Motors’ 15 per cent holding.
Meanwhile, thus far in the month of March 2025, the stock price of SML Isuzu has zoomed 62 per cent. The stock has recovered 66 per cent from its 52-week low of ₹1,030.90 touched on February 28, 2024. The stock had hit a 52-week high of ₹2,406 on May 23, 2024.
The potential acquisition could mark M&M’s strategic entry into the trucks and buses segment, allowing it to expand beyond its current portfolio of passenger and light commercial vehicles. According to reports, M&M is evaluating a share price of ₹1,400–1,500 for SML Isuzu in the proposed deal.
As of December 2024, Sumitomo Corporation, the promoter, owned 43.96 per cent of SML Isuzu, according to stock exchange data. Japan’s Isuzu Motors, known globally for its SUVs and pickup trucks, holds a 15 per cent stake in SML Isuzu through a separate entity, the shareholding pattern data shows.
While the exact valuation details remain undisclosed, a competing bid from M&M values SML Isuzu at around ₹2,026 crore. The company has called for a board meeting today followed by an analyst call later in the evening.
“The schedule of Conference Call for analysts and investors to be held on Wednesday, 26th March 2025 from 5.15 pm to 5.45 pm (IST) to provide corporate updates emanating out of the Board Meeting to be held earlier in the day called at shorter notice,” Ashok Leyland said in an exchange filing.
SML Isuzu is an auto original equipment manufacturer (OEM) operating in the commercial vehicles (CV) space which includes both trucks as well as buses (school buses). It produced approximately 9,700 units in April to December 2024 (9MFY25), with domestic sales pegged at 9,228 units (down 2 per cent YoY). Its market share in 9MFY25 is pegged at 1.35 per cent in overall CV domain (flat YoY), 6.8 per cent (down 184 bps YoY) in M&HCV buses segment and 9.83 per cent (down 27 bps) in LCV-Passenger Carriers.
The company holds negligible market share in the trucks segment and primarily operates in the bus domain. Ashok Leyland already possesses a significant 33 per cent market share in M&HCV buses segment, however its market share in LCV-passenger carrier domain is low at ~2 per cent. It remains to be seen at what valuation Ashok Leyland executes the deal. Key monitorable will also be the company’s take on obtaining CCI approval given buses is a concentrated space controlled by five major players, ICICI Securities said in a note.
Meanwhile, according to SML Isuzu, the demand for trucks is expected to be driven by macroeconomic growth, infrastructure development, and evolving industry dynamics. The government’s focus on infrastructure development, the Bharatmala project, the Smart Cities Mission, and dedicated freight corridors is expected to create a significant demand for commercial vehicles.
Overall demand for buses is expected to grow in the coming years, driven by increasing investments in the country’s transit system. Both state and central governments are enthusiastic about advancing the transportation system. The company said it is looking at a good opportunity in special application vehicles such as refrigeration vans, water tankers, specialised garbage collection vehicles, dog vans, etc. Currently, the majority of the company’s export volumes come from the neighbouring countries – Bangladesh, Nepal and Bhutan.