SML Mahindra shares rally 44% in two days after board approves acquisition of M&M's truck, bus business

Shares of SML Mahindra Ltd (formerly SML Isuzu Ltd) extended their sharp rally for a second straight session on Thursday, rising another 20 per cent to hit a record high of Rs 5,478.60. With this, the stock has surged 43.99 per cent over the past two trading sessions.

The rally came after the company's board approved the acquisition of Mahindra Truck & Bus Division (MTBD) from Mahindra & Mahindra Ltd (M&M) for a cash consideration of Rs 525 crore.

According to the company, the proposed acquisition will bring Mahindra Group's truck and bus business under a single focused entity. The transaction is expected to be completed during FY27, subject to the necessary approvals and completion conditions.

SML Mahindra said the integration will create a comprehensive commercial vehicle portfolio covering light, intermediate and heavy trucks, as well as buses. The company expects the move to unlock greater scale, operational synergies and stronger market competitiveness.

The transaction is also aimed at strengthening Mahindra Group's presence in the commercial vehicle segment. Together, M&M and SML Mahindra command a 52 per cent market share in the light commercial vehicle segment below 3.5 tonnes. Their combined share in the heavy commercial vehicle segment is around 6 per cent.

The company said it is targeting a 10-12 per cent market share in the heavy commercial vehicle segment by FY31 and aims to cross 20 per cent by FY36.

In FY26, M&M's Truck and Bus Division recorded a 13 per cent year-on-year (YoY) increase in volumes to 14,832 units, while SML Mahindra reported 17 per cent year-on-year growth to 16,632 units.

SML Mahindra was formed after M&M acquired a 58.97 per cent stake in SML Isuzu from Sumitomo Corporation and Isuzu Motors on August 1, 2025. Following the acquisition of the majority stake and the subsequent mandatory open offer, the proposed transfer of MTBD is intended to create a simplified operating model with sharper market focus, enhanced scale and improved competitiveness.

"The transaction simplifies Mahindra Group's commercial vehicle business structure by consolidating truck and bus operations under SML Mahindra, creating a single focused entity dedicated to growth and leadership in the commercial vehicle sector," said Anish Shah, Group CEO & MD, Mahindra Group.

"This is an important step towards our aspiration of building a leading position in the truck and bus segment and creating long-term value for all stakeholders," he said.

Manufacturing of Mahindra-branded trucks and buses will continue to be undertaken by M&M under a contract manufacturing arrangement, ensuring continuity of supply and operational stability.

"This partnership is about unlocking the best of both organisations. By combining the strengths of SML and Mahindra Truck & Bus, we can drive meaningful synergies across operations, technology and customer-facing domains while preserving the unique heritage and market positioning of both brands. Together, the two brands will be better placed to expand customer reach, enhance offerings and create greater value for all stakeholders," said Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra Ltd.

The combined business is expected to benefit from enhanced scale, a wider market presence, a broader product portfolio and improved operational efficiencies.