SML Mahindra Expects Margin Recovery By Q4FY27, Plans Electric Bus Launch

SML Mahindra Ltd expects its operating margins to recover by the fourth quarter of the current financial year, supported by further price hikes and cost-control measures even as higher input and employee costs weighed on profitability in the June quarter, a company official said.

Speaking to reporters at the launch of the BLAZO i-TRK heavy commercial vehicle range here on Thursday evening, Vinod Sahay, Executive Chairman of SML Mahindra Ltd said the company was facing a cumulative material cost inflation of about 5 to 6%.

"Total material cost pressure is around 5 to 6%, whereas price increases taken in two tranches this year in April and July so far total around 5%. However, implementing these price increases in market operating prices would take another few months. We expect to fully mitigate this cost pressure through further market-driven price hikes and cost-control measures by Q4, bringing margins back to normal levels," Sahay said.

Also a member of the group executive board at Mahindra Group, Sahay said future price increases would remain calibrated and market-driven.

For the quarter ended June 30, 2026, the company's EBITDA margin declined to around 10.5% from 12.4% a year earlier.

The revenue from operations rose 13.2% to around ₹958 crore in the first quarter of FY27 from ₹846 crore in the year-ago period, aided by seasonal bus demand and growth in light commercial vehicle volumes.

The margin pressure was attributed to higher raw material and employee costs, besides transition-related expenses.

On the proposed acquisition of Mahindra & Mahindra's Truck and Bus Division (MTBD), Sahay said there was no plan to physically integrate the existing trucks and buses assembly lines of M&M factories into SML Mahindra.

"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," he said.

Sahay said the company would unveil a three-year capital expenditure plan for the consolidated entity (SML and MTBD) sometime next year.

On electric vehicles, he said SML Mahindra was working on an electric bus, which is targeted for launch by the fourth quarter of FY27 or early next fiscal.

The electric bus will primarily cater to the staff and school transportation segments, he said.

The company is also working on an electric truck, though no timeline has been announced for its launch, Sahay said.

In July, Mahindra & Mahindra's board approved the sale of its truck and bus division to its listed subsidiary SML Mahindra on a slump-sale basis for ₹525 crore. The transaction paves the way for the automotive major to create a unified truck and bus business under SML Mahindra, which it had acquired a year ago from Sumitomo Corp. and Isuzu Motors Ltd for a 58.97% stake.

The integration of MTBD is expected by January. The company aims to build a ₹12,500 crore revenue business by FY31, raise its combined commercial vehicle market share from around 6% currently to 10-12% by FY31 and over 20% by FY36.