Mahindra & Mahindra (M&M) is acquiring a 58.96% stake in SML Isuzu, comprising 43.96% from Sumitomo Corporation for approximately ₹413.55 crore (at ₹650 per share) and 15% from Isuzu Motors for ₹141.10 crore. This acquisition, announced on April 24, 2025, strengthens Mahindra’s position in the light and intermediate commercial vehicle (LCV/ICV) market, particularly in buses and trucks, where SML Isuzu holds a 16% market share in ILCV buses. The move aligns with Mahindra’s strategy to expand its commercial vehicle portfolio, leverage SML’s manufacturing capabilities in Punjab, and capitalize on growing demand for electric and CNG vehicles. The deal, subject to regulatory approvals, will make SML Isuzu a subsidiary of Mahindra, with potential synergies in dealer networks and product development.
Sumitomo Corporation sold its 43.96% stake in SML Isuzu to Mahindra & Mahindra (M&M) for approximately ₹413.55 crore as part of a strategic move. Sumitomo, a diversified Japanese conglomerate with interests in steel, automobiles, construction, and more, may have chosen to divest its stake in SML Isuzu to focus on other high-priority sectors or markets. The sale aligns with portfolio optimization, allowing Sumitomo to redirect capital to areas with potentially higher returns or strategic importance.
Since 2015, Sumitomo has refocused from natural resources (after losses in shale oil) to automotive, infrastructure, and non-resource businesses, aligning with its 400-year-old business philosophy of integrity, sound management, and societal benefit. The company’s “Six Material Issues” (established in 2017) guide its pursuit of sustainable growth, emphasizing solutions to social issues and decarbonization. With 113 overseas locations and 22 in Japan, Sumitomo operates over 900 companies and employs 70,000 personnel globally. Its activities in regions like Africa (e.g., Ambatovy project, Mozambique power plants) and Asia (e.g., industrial parks, cement decarbonization) reflect a commitment to local community development and environmental sustainability.
Sumitomo has deep experience in mobility space but doesn’t have deeper footprints in Indian Auto market. It is engages in automotive distribution e.g., Mazda & Nissan distribution, shipbuilding, aircraft, rail, and construction equipment businesses. Sumitomo has investments in car-rental services like Turo and railway projects, such as the Philippine National Railways and Metro Manila Subway.
SML Isuzu, while profitable with ₹2,196 crore in revenue and ₹179 crore in EBITDA in FY24, holds a 16% market share in the ILCV bus sector but faces intense competition in India’s CV market.
The deal was priced at ₹650 per share, significantly lower than SML Isuzu’s market price of ₹1,766.70 before the announcement, leading to a 10% lower circuit in SML’s stock price. Sumitomo accepted a discounted valuation to exit and focus on its strategic businesses. The discounted price may have been attractive to Mahindra.
SML Isuzu is a joint venture involving Sumitomo and Isuzu Motors, with Isuzu also selling its 15% stake to Mahindra for ₹141.10 crore.
Mahindra’s acquisition is driven by its aim to strengthen its position in the light and intermediate commercial vehicle (LCV/ICV) market, particularly in electric vehicles (EVs) and compressed natural gas (CNG) segments. Sumitomo may have recognized that Mahindra’s resources, market presence, and synergies (e.g., with its Swaraj tractors ecosystem) make it better positioned to scale SML Isuzu.
SML-I’s and Mahindra Truck and Bus businesses work well together, and M&M’s role as SML-I’s new promoter is anticipated to boost customer value by fostering innovation and advancing effective and sustainable logistics solutions. The transfer of Sumitomo Corporation’s stake in SML-I to M&M was judged to be the best course of action for the long-term development of SML-I and all of its stakeholders based on this synergy.
This deal is a component of the business portfolio transformation strategy outlined in Sumitomo Corporation’s Medium-Term Management Plan 2026, which was unveiled in May 2024. The full-year earnings prediction for fiscal year 2025, which will be revealed later, will take into account the effect of this stake transfer on Sumitomo Corporation’s performance.
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