Maruti Suzuki to foray into the LCV space - Angel Broking

Maruti Suzuki (MSIL) has announced that it set to foray into the light commercial vehicle (LCV) segment by launching a new product in the segment within the next two years. The company has already received the board approval for the project last week. The new product will be developed on the Suzuki Motor Corporation's Carry platform and will be available both in the diesel and CNG variant. Carry is an LCV which is being sold in markets such as China, Indonesia and Pakistan. While MSIL has not divulged any technical specifications of the new LCV, the Management indicated that the company engineers are working on adapting the Fiat diesel engine to be used in the LCV.

We see this as a positive development for MSIL and believe that the entry into the LCV segment would diversify the company's portfolio. Further, MSIL would also make its presence felt in one of the fastest growing segments in the domestic automotive industry. The segment is currently dominated by Tata Motors (Ace), Mahindra and Mahindra (Maxximo) and Ashok Leyland (Dost). Additionally, this should also propel MSIL's volume growth and enable the company to utilize its enhanced capacity which is expected to touch 1.9mn units by the end of FY2015 from 1.6mn units currently. At Rs. 1,375, MSIL is trading attractively at 12.5x FY2015E earnings. We maintain our Buy rating on the stock with a target price of Rs. 1,648.

Source : Equity Bulls

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