Suzuki-Proton deal may benefit Maruti Suzuki shares: Angel Broking

Suzuki Motor Corporation has signed a deal with Malaysian carmaker Proton for the assembly and sale of an entry-level model in its domestic market. According to Angel Broking, the deal is likely to benefit Suzuki's subsidiary Maruti Suzuki India as the car would be manufactured by Maruti India and exported to Proton.

Under the agreement, Suzuki will supply completely knocked down (CKD) kits of cars to Proton, Malaysia's first carmaker established in 1983, which currently enjoys a 17 per cent market share. The company sold about 1,16,000 vehicles in 2014.

According to an MoU signed between Suzuki and Proton on June 15, 2015, the first model will be a compact passenger car to be assembled by Proton at its Tanjung Malim plant from August 2016. A decision on additional models will be taken after studies by Proton and SMC.

In a similar agreement earlier, Suzuki sourced the A-Star hatchback made by Maruti Suzuki at its Manesar plant for Nissan Motor, which sold the car as the Pixo in Europe. The arrangement helped Maruti Suzuki increase exports by 50,000 units a year. Maruti also ships the Ertiga multipurpose vehicle as a completely knocked down unit for assembly in Indonesia.

A report by Angel Broking said, "Sources in Maruti Suzuki said that its compact 1000 cc models such as the Celerio, Wagon R and the twin Alto models could be ideal for the Malaysian market. Currently, we have accumulate rating on the stock."

Maruti Suzuki shares closed 1.82 per cent higher at Rs 3,877. The BSE Sensex gained 1.06 per cent at 27,115.83

Japanese parent Suzuki Motor Corporation holds 56.21 per cent stake in Maruti Suzuki India (as per the shareholding pattern as on 31 March 2015).