SML ISUZU Q1 FY26: From Potholes to Profits—Did This Underdog Just Zoom Past Expectations?

SML ISUZU Q1 FY26: From Potholes to Profits—Did This Underdog Just Zoom Past Expectations?

1. At a Glance

SML Isuzu just reported its best-ever quarterly profit—Rs. 67 Cr in Q1 FY26, clocking a 44% YoY jump! From being the slow-moving cousin of Ashok Leyland, this LCV/MCV player is now speeding into the limelight, thanks to sharp operational turnaround, Isuzu muscle, and market tailwinds.


2. Introduction with Hook

Imagine a Maruti 800 overtaking a Ferrari on a twisty hill road. That’s SML Isuzu in FY26.
This microcap underdog—often dismissed as “just another CV stock”—has pulled off a Dhoni-style helicopter shot in a market full of flat innings.

  • Q1 FY26 PAT: Rs. 67 Cr (vs Rs. 46 Cr YoY)
  • 3-Year Stock CAGR: 73% (Yes, more than a few smallcap mutual funds)

Welcome to the SML Show—Limited by name, unlimited by surprise.


3. Business Model (WTF Do They Even Do?)

SML ISUZU makes Commercial Vehicles:

  • Buses (67% of revenue): For schools, staff transport, and tourist coaches.
  • Trucks (26%): Primarily for intra-city and last-mile cargo movement.
  • LCVs + MCVs: Core niche segment (5–13 tonne range) where biggies like Tata Motors aren’t hyperfocused.

Unique Angle:
SML doesn’t compete with Ashok Leyland head-on. Instead, it thrives in the not-so-glamorous rural/municipal segment, where rugged, low-maintenance vehicles win.


4. Financials Overview

Q1 FY26 Snapshot (Rs. Cr):

MetricQ1 FY26YoY Change
Revenue846+34%
EBITDA (approx)105+30%
Net Profit67+44%
OPM12%Up 100 bps
EPS46.27Rockstar

TTM Sales: Rs. 2,498 Cr
TTM PAT: Rs. 142 Cr
Debt: Down from Rs. 421 Cr to Rs. 327 Cr

Verdict:
You know the term “operating leverage”? This is it—live, in action, with turbocharged margins.


5. Valuation

Let’s talk range, not guesswork.

Current Price: ₹3,675
Trailing EPS: ₹98.29
Book Value: ₹264
P/E: 37.5x (bit spicy)
P/B: 13.9x (very spicy)

Fair Value Range:

MethodFair Value Range (₹)
DCF (Conservative)2,900 – 3,200
Relative Valuation (P/E 28–30x)2,750 – 3,500
Market Mood Based3,500 – 4,200 (if bulls high)

Conclusion:
Pricey on P/B, but earnings growth is making bulls look the other way.


6. What’s Cooking – News, Triggers, Drama

  • Q1 FY26 Surprise Beat: 12% OPM, net profit up 44%
  • New Bus Contracts: Rumors of fresh state transport orders brewing
  • Electric CV?: No concrete EV announcement yet, but with Isuzu behind, anything’s possible
  • FII Holdings: Jumped from 1.76% to 15.73% in a year
  • Re-rating Candidate: Smallcap turned “scalp-cap” for institutions

7. Balance Sheet

FY25 Snapshot (₹ Cr):

ParticularsValue
Equity + Reserves382
Borrowings327
Other Liabilities590
Total Liabilities1,299
Fixed + CWIP380
Current Assets919
Cash & InvestmentsNil. Cash flows are king here.

Key Insight:
Debt reduced despite capex—free cash flow revival is real.


8. Cash Flow – Sab Number Game Hai

Cash Flow Trends (₹ Cr):

YearCFOCFICFFNet Flow
FY2390-42-55-7
FY24-50-4612731
FY25177-61-148-32

Why it Matters:
FY25 saw a healthy CFO resurgence after FY24’s cash hiccup. Promising trend for long-term sustainability.


9. Ratios – Sexy or Stressy?

MetricFY25FY24
ROE36.4%30.1%
ROCE27.1%24.0%
Debtor Days40.428.0
Inventory Days116125
Cash Conversion82 Days81 Days

Concern:
Debtor days jumped. Might need a gentle “pay up please” reminder to customers.


10. P&L Breakdown – Show Me the Money

YearSalesEBITDAOPM %PATEPS
FY231,822824%2013.7
FY242,39823410%12284.1
FY25 (TTM)2,49825810.3%14298.3

Mic Drop:
From flatlining in FY21 to doubling profits in FY25—turnaround has been smoother than a luxury bus ride.


11. Peer Comparison

CompanyCMP (₹)P/EROE %Market Cap (₹ Cr)PAT (TTM ₹ Cr)OPM %
SML Isuzu3,67537.536.45,33214210.3
Ashok Leyland12423.529.272,8263,09819.0
Atul Auto45368.64.31,25718.37.2

Positioning:
SML Isuzu is neither the cheapest nor the biggest—but it’s possibly the most aggressive on margins and comeback story.


12. Miscellaneous – Shareholding, Promoters

CategoryQ1 FY26
Promoters43.96%
FIIs15.73%
DIIs0.29%
Public40.02%
No. of Holders28,716

Fun Fact:
FII holding jumped nearly 9x in just over a year. Clearly, the Japanese connection + CV growth = new institutional darling.


13. EduInvesting Verdict™

From a company that once got lost in the CV traffic to a profit machine with roaring margins and institutional love, SML Isuzu is rewriting its legacy.

  • Strong ROE? Check.
  • Cash flows returning? Check.
  • Operating margins in double digits? Oh yes.
  • Debt under control? Improving.
  • Valuation? Bit pricey, but worth watching.

It’s not a Tata, not an Ashok—but definitely not to be ignored anymore. Buckle up—this one’s on the move.


Metadata
– Written by EduInvesting Team | 22 July 2025
– Tags: SML ISUZU, Commercial Vehicles, Auto Sector, Q1 FY26, Isuzu Motors, Sumitomo

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