- 26 Mar 2025
- ICICIdirect Research
ASHOK LEYLAND IS IN ADVANCED TALKS TO ACQUIRE A MAJORITY STAKE IN SML ISUZU
ASHOKLEY - 225 Change: -2.68 (-1.18 %)News: According to media sources, Ashok Leyland is in advanced talks to acquire a majority stake in SML Isuzu, potentially buying out Sumitomo corporation’s 44% stake and Isuzu Motors’ 15%. While the exact valuation details remain undisclosed, a competing bid from M&M values SML Isuzu at ~₹ 2,026 crore. The company has called for a board meeting today followed by an analyst call later in the evening.
View: SML Isuzu is an auto OEM operating in the commercial vehicle space which includes both trucks as well as buses (school buses). It produced ~9700 units in 9MFY25 with domestic sales pegged at 9,228 units (down 2% YoY). Its market share in 9MFY25 is pegged at 1.35% in overall CV domain (flat YoY), 6.8% (down 184 bps YoY) in M&HCV buses segment and 9.83% (down 27 bps) in LCV-Passenger Carriers. The company holds negligible market share in trucks segment and primarily operates in Buses domain. Ashok Leyland already possesses significant 33% market share in M&HCV buses segment, however its market share in LCV -passenger carrier domain is low at ~2%. It remains to be seen at what valuation Ashok Leyland executed the deal. Key monitorable will also be company’s take on obtaining CCI approval given buses is a concentrated space controlled by five major players.
Impact: Neutral