Mahindra & Mahindra Share Price Target Retained at Rs 2,700 By Emkay Post SML Isuzu Acquisition Bet

Emkay Global has reaffirmed its ‘ADD’ rating on Mahindra & Mahindra (M&M), retaining its share price target at Rs 2,700, as the automaker takes a bold strategic step to strengthen its commercial vehicle (CV) business. This comes in the wake of M&M’s acquisition of a majority stake in SML Isuzu, which is expected to double its market share in the +3.5-ton CV space.

M&M recently announced the acquisition of approximately 59% stake in SML Isuzu for a cash consideration of Rs 550 crore, from promoters Sumitomo Corporation and Isuzu Motors, with a subsequent open offer for an additional 26% stake. The company aims to complete the transaction by December 2025.

Strengthening Presence in +3.5T CV Segment
M&M currently holds a 3% market share in the +3.5-ton CV category, compared to its dominant 52% share in sub-3.5-ton LCVs. The SML Isuzu acquisition is aimed at doubling the company’s share to 6% immediately, with long-term ambitions of reaching 10–12% by FY31 and over 20% by FY36.
 

“This acquisition aligns with M&M’s broader CV strategy of building a strong, scalable, self-sustaining truck/bus business, with clear financial targets amid a positive medium-term industry outlook,” Emkay said in its report.

Read More 
Urban Company IPO: 5 Key Things You Need To Know About Its Rs 1,900 Cr

Minimal Near-Term Financial Impact
While the strategic intent is clear, the immediate financial upside is modest, with Emkay noting that the deal would add less than 2% to revenue and ~1% to EBITDA/PAT on a pro forma basis. However, synergies across cost, platforms, operations, and brand are expected to unfold in the longer term.

M&M also intends to leverage its supplier ecosystem to accelerate SML Isuzu’s electric bus development, particularly in CNG and electric vehicle segments. The report notes that no major capex is expected in the next two years due to SML Isuzu’s frugal manufacturing model and strong IP portfolio.

Focus on Synergies and Network Expansion
The combined entity is projected to scale up truck and bus market share to 10–12% by FY31 and 20%+ by FY36, up from the current 3%. In LCV buses, the combined market share rises to 21% (from 16% for SML Isuzu). The acquisition also provides M&M access to 100–200 dealers and service touchpoints, where further expansion is a priority.

“While the acquisition reflects M&M’s continued focus on value-accretive capital allocation, the financial impact remains limited,” Emkay concluded, maintaining its sum-of-the-parts (SoTP)-based target price of Rs 2,700.

Disclaimer

The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds