A leading player in the automobile industry is making waves with its plans to acquire the entire promoter stake in SML Isuzu. This strategic move highlights the company’s commitment to expanding its presence in the market and consolidating control over the business. The acquisition could significantly impact the acquirer’s operations and its positioning within the industry.
Price Action
During Monday’s trading session, shares of Mahindra & Mahindra Ltd jumped to an intraday peak of Rs.2,822.15 each, reflecting a 0.7 percent increase from the prior closing price of Rs.2,801.85 per share. However, the stock retreated later and closed at Rs.2,777.00 apiece.
Over the past five years, the stock has delivered over 850 percent returns. As of March 24, the share price of SML Isuzu Ltd closed at Rs.1,703.00 per share, rising 3.09 percent from its previous closing price of Rs.1,651.90 apiece.
What happened
Mahindra & Mahindra Ltd., a leading manufacturer of commercial and passenger vehicles, is reportedly in discussions to acquire the entire promoter stake in SML Isuzu Ltd., according to sources familiar with the matter, as shared with CNBC Awaaz. The sources further revealed that Mahindra & Mahindra is considering a valuation range of Rs.1,400 to Rs.1,500 per share for SML Isuzu, which represents a discount of 11 percent to 17 percent from the current market price.
M&M’s board is expected to meet this week to review the proposal. If the deal goes through, it could pave the way for M&M to strengthen its presence in the trucks and buses segment. As of the end of December, the promoters of SML Isuzu, including Sumitomo Corporation, held a 43.96 percent stake in the company.
Volume Increase
Total volumes reached 245K, reflecting a 16 percent year-on-year (YoY) growth. SUV volumes accounted for 142K, marking a 20 percent YoY increase. LCV (<3.5T2) volumes stood at 67.5K, showing a 7 percent YoY rise. Farm equipment volumes reached 121K, also reflecting a 20 percent YoY growth.
Exports totaled 3.7K, with a 14 percent YoY increase. The company strengthened its market leadership with a 44.2 percent market share in Farming automobiles, a 240 basis points (bps) improvement YoY. This achievement represents the highest-ever market share recorded for the third quarter.
Also read: Fertiliser stock jumps 14% after India imposes anti-dumping duty on Pretilachlor imports from China
Earnings Report
According to its recent financial updates, Mahindra & Mahindra Ltd reported a consolidated revenue of Rs.41,470 crores in Q3 FY25, marking a 17 percent increase from Rs.35,299 crores in Q3 FY24. Moreover, the company saw a 22 percent increase in net profit to Rs.3,624 crores, compared to Rs.2,977 crores in the same period.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 12.98 percent and a Return on Equity (ROE) of 16.83 percent. Its Price-to-Earnings (P/E) ratio stands at 28.1, higher than the industry average of 13.53. Furthermore, the company maintains a current ratio of 2.61, a debt-to-equity ratio of 1.66, and an Earnings Per Share (EPS) of Rs.99.62.
Written by – Siddesh S Raskar
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
