Mahindra & Mahindra (M&M) recently experienced a notable surge in its share price, climbing 2.82% to reach an intra-day high of Rs 2,945 on the National Stock Exchange. This increase follows the company’s announcement regarding its acquisition of a 58.96% stake in SML Isuzu for Rs 555 crore. As a result, M&M emerged as one of the top five gainers in the Nifty 50 index.

Strategic Acquisition to Boost Market Presence

M&M plans to purchase 43.96% of the shares from Sumitomo Corporation and an additional 15% from Isuzu Motors, both of which are current stakeholders in SML Isuzu. This strategic move is contingent upon receiving regulatory approvals, including clearance from the Competition Commission of India (CCI), and is projected to finalize by 2025.

• Acquisition Details:
  • Total Stake: 58.96%
  • Acquisition Cost: Rs 650 per equity share
  • Open Offer: M&M will initiate a mandatory open offer to acquire up to an additional 26% from public shareholders as mandated by SEBI’s takeover regulations.

This acquisition is set to significantly enhance M&M’s presence in the commercial vehicle (CV) sector, particularly for vehicles exceeding 3.5 tonnes, where it currently holds a modest 3% market share.

Future Growth Projections

Post-acquisition, M&M aims to increase its market share in the >3.5T commercial vehicle segment to 6% initially, with ambitious targets of achieving 10–12% by FY31 and over 20% by FY36. This expansion strategy is a pivotal part of M&M’s growth trajectory in the ever-competitive commercial vehicle market.

About SML Isuzu

SML Isuzu, initially founded as Swaraj Vehicles in 1983, underwent several name changes, ultimately adopting its current branding in 2011. The company specializes in manufacturing light and medium commercial vehicles, holding a 16% market share. It operates as a joint venture between Sumitomo Corporation and Isuzu Motors, focusing on delivering reliable and efficient transportation solutions.

M&M’s Stock Performance Highlights

M&M’s stock has shown impressive performance recently:

• 5% increase over the past five trading days.
• 9% return in the last month.
• 4% rise over the past six months.
• An outstanding 40% increase in value over the past year, highlighting the company’s strong market position and investor confidence.

This acquisition not only represents a strategic move for M&M but also underscores its commitment to expanding its influence in the commercial vehicle industry, positioning itself for future growth and success.