Stay away from Maruti Suzuki India in the medium term: Ajay Bodke, Prabhudas Lilladher

In an chat with ET Now, Ajay Bodke, Prabhudas Lilladher, shares his views on Maruti Suzuki India. Excerpts:

ET Now: Let us talk about Maruti because that has been one big drag, do you sense that the news is now in the price and concerns about the Gujarat plant are already there in the price or do you think there is further weakness in store for Maruti?

Ajay Bodke: When this news was announced I had said that this is a issue which will have medium term repercussions on the company. People will pursue it as a major corporate governance issue and although post the weakness for a day or two that we saw the price did go up by Rs 100 from 1590 to around some 1680.

I always was of the view that this issue is not going to go away, this will remain an overhang, a lot of institutional investors have very rightly taken up with the management that they should have a rethink on this issue and I would sort of clearly be on the side of the institutional investors and urge the management to have a rethink about having a separate plant under Suzuki and because Maruti does have a lot of cash on its books which it needs to deploy and to what better way than to deploy in a manufacturing operation.

So I would stay away from Maruti at the current levels, I would wait for the issue to unfold and then sort of take a call may be once some resolution happens about this contentious issue between the management and the minority shareholders.