Maruti Suzuki India (MSIL) has outlined the agreement details with Suzuki Motor Corporation (SMC) for the new Gujarat plant, with SMC's 100% subsidiary, Suzuki Gujarat (SG), undertaking the project. As indicated earlier, MSIL would voluntarily seek minority shareholders' approval for this arrangement. The additional clarifications by MSIL on the proposed expansion of the Gujarat plant further safeguards minority shareholders' interest.

Commenting on the same, ICICIdirect said, "We feel MSIL's management has done well to alleviate some concerns of minority shareholders related to the arrangement. We believe this would reduce the overhang on the stock. Hence, multiples would not face any specific discount due to the same. Along with the same, MSIL remains an attractive play on the discretionary purchase recovery among consumers. It has new products lined up to capture the same.

On competitive intensity, we feel MSIL has handled it in an admirable manner. We feel it can possibly maintain the same, going ahead. We have upped our volume estimates to 1.4 million units in FY16E. We feel with strong cash generation, MSIL could increase dividend payouts in the coming years as investments remain modest. We upgrade our target multiple to 16x. Thus, we arrive at a target price of Rs 2,375. We maintain Hold rating on the stock."

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