Expansion at MSIL's Gujarat plant to be delayed due to the slowdown - Angel Broking

Maruti Suzuki (MSIL) has announced that the commissioning of its new plant in Gujarat will be delayed due to the ongoing slowdown which has had a severe impact on the demand. The Gujarat plant which was scheduled to be operational by end of FY2016 will miss its deadline now and depending upon the assessment of the projected demand, appropriate decision would be taken in the future. According to the Management, the company is yet to being the construction at the Gujarat site.

MSIL has ambitious investment plans of Rs. 4,000cr towards setting up an 250,000 units /annum capacity at the Gujarat plant. Meanwhile, MSIL is on track to commission its third assembly line at the Manesar plant which will increase the annual installed capacity of the company to 1.5mn units from 1.26mn units currently. Post the recent correction in the stock price (down ~25% over the last two months), the stock is trading attractively 12x FY2015 earnings.

We maintain our Buy rating on the stock with a target price of Rs. 1,571.

Source : Equity Bulls

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