SML Isuzu zooms 44% in 6 days; what's fuelling the automobile stock?

Business Standard

13 hours ago

SML Isuzu share price
Shares of SML Isuzu hit a new high at ₹2,690, surging 9 per cent on the BSE in Friday's intra-day trade in an otherwise weak market. In comparison, the BSE Sensex was down 0.2 per cent at 83,061 at 12:16 PM.
Thus far in the month of July, the stock price of the commercial vehicle company has soared 28 per cent after the company reported strong sales numbers for the month of June 2025. Meanwhile, in the past six trading days, SML Isuzu's market price has appreciated by 45 per cent. It has more-than-doubled or zoomed 163 per cent from its 52-week low of ₹1,030.90 touched on February 28, 2025.
SML Isuzu - June month sales numbers
SML Isuzu reported a 6.3 per cent year-on-year (YoY) growth in total vehicle sales at 1,871 units in June 2025, driven by cargo vehicle sales. The company had sold 1,760 units in June 2024, according to an exchange filing.
The company's cargo vehicle sales grew 41.6 per cent YoY to 480 units in June 2025 from 339 units in the same month last year. However, passenger vehicle sales declined 2.1 per cent to 1,391 units from 1,421 units in June 2024.
For the first quarter of fiscal year 2025-26 (April to June), SML Isuzu reported a 12.5 per cent YoY jump in total vehicle sales of 4,926 units compared to 4,379 units in the corresponding period last year. Cargo vehicle sales during this three-month period surged 46.3 per cent to 1,282 units from 876 units, while passenger vehicle sales grew 4.0 per cent to 3,644 units from 3,503 units.
Mahindra & Mahindra (M&M) to acquire majority stake in SML Isuzu
Mahindra & Mahindra (M&M) on April 26, 2025, announced that it has entered into an agreement to acquire 58.96 per cent stake in SML Isuzu at ₹650 per share, which is an outlay of ₹555 crore.
As part of the transaction, M&M would acquire the entire stake of 43.96 per cent held by Sumitomo Corporation, promoter of SML Isuzu, and separately also acquire 15 per cent stake held by Isuzu Motors Ltd, public shareholder of SML Isuzu, for an aggregate consideration of ₹555 crore.
In addition, M&M has made an open offer for acquisition of up to 26 per cent stake from eligible public shareholders of SML Isuzu in accordance with the SEBI Takeover Regulations.
The open offer opened on June 19, 2025 and closed on July 2, 2025.
M&M said the acquisition will enable the company to strengthen its presence in the trucks and buses segment by unlocking operational synergies, enhancing product development capabilities, and expanding market reach. It supports the company's long-term growth vision in the commercial vehicle industry.
BNP Paribas, ICRA view on M&M deal
M&M already has a strong presence in the small commercial vehicle (SCV) goods-carrier segment. The company can use SML Isuzu's Intermediate Light Commercial Vehicle (ILCV) passenger-carrier platform to expand into the ILCV goods segment as well. Also, Mahindra's vast network could help further ramp-up volumes of SML Isuzu's product. With growing competition from Ashok Leyland and Tata Motors in the LCV segment, this appears to be Mahindra's response. Buses have been a fast growing segment in recent years and through SML Isuzu, Mahindra will get access to this market. However, the brokerage firm thinks M&M will have to invest in the SML Isuzu's products as they seem to have been underinvested in the recent years.
The change in ownership of the entity to M&M, when it materialises, is likely to aid SML's product development/ network expansion plans over the medium term, aided by M&M's well-established position in the automotive sector. Accordingly, the developments are expected to be credit positive in ICRA's view.