fundamental & technical analysis of automobile industry
TRANSCRIPT
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Lets have a test drive of-Fundamental Analysis of Automobile in India
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INDUSTRY OVER-VIEW
•The automobile industry in India is the 9th largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.
During the year 2009, several new commercial launches happened, but the significant one was the commercial rollout of the world's cheapest car, Tata Nano. We also saw some of the most expensive models like Phantom (about $750,000) and the Ghost ($250,000) from Rolls Royce and Volkswagen's famed Beetle ($40,000). During the year, the overall car market grew around 15 % over 2008, and a similar pattern is expected in the coming year too.
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INDUSTRY OVER-VIEW As per Ernst and Young’s report, the Indian
passenger car market is expected to grow at 12% annually over the next five years
Several analysts forecast, "The industry's turnover is estimated to touch $155 billion by 2016.“
If the trend continues like this, then the Indian auto industry would be the seventh largest auto industry in the world. It would also be the third largest in that sector by 2030, after China and the US.
As per India’s Automotive Mission Plan, India can be the leading car maker within the next five years. At present, Indian car industry contributes over 5% in that sector and it can then touch to 10% by 2016.
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The Key Players…
Commercial vehicles
TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors
Passenger vehicle
TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors
Two Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors
Three Wheeler Bajaj Auto, Piaggio India
Bajaj Auto, 24.4%
TVS Motors, 17.7%
Yamaha, 3.8%
Others, 5.8%
Honda Motors, 8.5%
Hero Honda, 39.8%
Maruti, 50.37
Hyundai, 19.17
Tata Motors, 17.19
Honda, 5.33
Others, 5.73
Two wheeler Passenger vehicle
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Snippets
1. The first automobile in India rolled in 1897 in Bombay.2. India is being recognized as potential emerging auto
market.3. Foreign players are adding to their investments in Indian
auto industry.4. Within two-wheelers, motorcycles contribute 80% of the
segment size.5. Unlike the USA, the Indian passenger vehicle market is
dominated by cars (79%).6. TATA dominates over 60% of the Indian commercial vehicle
market.7. 2/3rd of auto component production is consumed directly
by OEMs.8. India is the largest three-wheeler market in the world.9. India is the largest two-wheeler manufacturer in the world.10. India is the second largest tractor manufacturer in the
world.11. India is the fifth largest commercial vehicle manufacturer in
the world.12. The number one global motorcycle manufacturer is in India.13. India is the fourth largest car market in Asia - recently
crossed the 1 million mark.
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Company overview:
Maruti Tata
Sales: 296,230. Market leader IN
passenger car segment.
Over 54.2% foreign investment.
Only 8% share held by investors other than institutional.
Sales: 38364. Market leader in
commercial car segment.
Among top three in passenger car segment
Over 41% share of Indian promoter.
11% is held by general public.
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Maruti Suzuki (2010)Particular No. Of Shares Percent Shares(%) Promoter Holding Indian Promoters
00.00 Foreign Promoters 54.21 Non-Promoter holdings (Other than Public) Financial Institutions/Banks
14.10 FII/Foreign Fin Inst/Foreign Banks 20.09 Corporate Bodies 6.00 Government Holdings 00.00 NRI
00.00 Mutual Funds 2.92 Other Foreign Holdings 0.07 General Public Individual Holding Upto Rs. 1 lakh 2.39 Individual Holding Excess of Rs. 1 lakh 0.09 Others 0.15 Total 288910060
100.00
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Tata Motors Ltd(2010)
Indian promoters 38.00
Foreign promoters 0.00 Other promoters 0.07 MFs/UTI 2.23 Banks/FIs 0.28 FIIs 15.67 Public corporate bodies 0.62 Indian public 8.83 NRIs 7.14 No of shares
479737904
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Share Holding Pattern
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Fundamental Analysis
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Amalgamation of quantitative and qualitative analysis.
Quantitative: capable of being measured or expressed in numerical terms.
Qualitative: related to or based on the quality or the character of something i.e. opposed to its size or quantity.
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Maruti SuzukiFundamentals
Market Capitalization ( Rs cr ) 37,985.89
Book Value 409.64
Debt / Equity 0.06
P/E 15.21
EPS 86.45
Return on Net Worth 20.85
Current Ratio 1.20
Quick Ratio 0.67
Interest Cover 131.98
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Dividend History (Rs.)Maruti Suzuki
26-Aug-2010- 6.00
21Aug-2009- 3.50
20-Aug-2008- 5.00
24-Aug-2007- 4.50
25-Aug-2006- 3.50
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Ratio Analysis
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10Interest Cover 90.62 61.01 40.93 34.21 107.36
Inventory Turnover Ratio
14.15 21.27 22.93 30.46 26.43
Debtors Turnover Ratio
19.45 21.12 25.76 26.33 33.65
Earnings Per Share 41.16 54.07 59.91 42.18 86.45
Return On Capital Employed(%)
33.46 30.65 26.18 17.37 28.41
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Cont…
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Current Ratio 1.77 1.40 0.91 1.51 1.02
Quick Ratio 1.31 1.13 0.66 1.26 0.68
Debt Equity Ratio
0.01 0.09 0.11 0.07 0.07
Long Term Debt Equity Ratio
0.01 0.09 0.06 0.07 0.07
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Tata Motors
Fundamentals
Market Capitalization ( Rs cr ) 586.99bn
Book Value 262.30
Debt / Equity 1.11
P/E
EPS 39.26
Return on Net Worth 14.96
Current Ratio 0.60
Quick Ratio 1.11
Interest Cover 2.77
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DividendTata MotorsAnnouncement Date Effective Date% Dividend Dividend
Type
May 27, 2010 Aug 10, 2010 150 Final
May 29, 2009 Aug 03, 2009 60 Final
May 28, 2008 Jun 16, 2008 150 Final
May 18, 2007 Jun 01, 2007 150 Final
Record Date
Ex Bonus Date
Ratio
Nov 01, 1995
Oct 04, 1995 3:5
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Ratio AnalysisRs. in Cr. Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006
Debt-Equity Ratio (x)
4.85 3.03 1.11 0.75 0.57
Long Term Debt-Equity Ratio (x)
2.98 1.84 0.59 0.46 0.50
Current Ratio (x)
0.74 0.81 1.06 1.20 1.13
Return On Capital Employed (%)
10.58 0.00 20.48 28.88 32.15
Ajdusted Net Profit Margin (%)
1.54 -3.72 5.00 6.11 6.45
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To be Presented by Anurag
Technical Analysis
Moving Average Convergence & Divergence
Bollinger Bands
Relative Strength Indes
Todays Performance
Volume Price Relationship
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Technical Analysis
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Bollinger Band Up 1362.61 Bollinger Band Middle 1274.39 Bollinger Band Low 1186.16
Relative Strength Index 88.9821
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Technical Analysis
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Bollinger Band Up 1056.59 Bollinger Band Middle 1019.1 Bollinger Band Low 981.616
Relative Strength Index 59.8716
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Maruti vs Auto vs Sensex
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Maruti Suzuki Today
Stock Price Movements
Day's High / Low 1,404.00 / 1,355.00
Previous Close / Open
1,369.60 / 1,365.10
Wtd. Avg Price 1,386.02
Total Traded Value (Cr.)
46.43
TTQ / 2W Avg Q (Lakh)
3.35 / 0.93
Circuit Limits NA
Mkt. Cap. Full / Free Float (Cr.)
40,064 / 20,032
1,386.75
+17.15 ( 1.25% )
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Tata Motors Today
Day's High / Low 1,040.80 / 1,020.00
Previous Close / Open
1,024.30 / 1,025.10
Wtd. Avg Price 1,031.38
Total Traded Value (Cr.)
45.32
TTQ / 2W Avg Q (Lakh)
4.39 / 10.79
Circuit Limits NA
Mkt. Cap. Full / Free Float (Cr.)
52,095 / 33,861
Stock Price Movements
1,028.80
+4.50 (0.44% )
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Comparison from the Eyes of Investors
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Particulars Maruti Suzuki Tata Motors
Net Profit 7.84 % 1.54%
Debt-Equity Ratio (x)0.06 1.11
Earning Per Share87 42
Current Ratio (x)1.20 0.60
Return On Capital Employed (%)
31.64 10.58
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2010 2009 2008 2007 2006
Maruti 87.07 42.18 59.91 54.07 41.16
Tata motors 42.56 0 53.68 53.45 42.36
5
15
25
35
45
55
65
75
85
95
Earning Per Share
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2010 2009 2008 2007 2006 2005
Maruti 4.3 5.72 9.34 10.29 9.53 7.57
Tata 2.4 3.77 6.96 6.94 7.35 7.02
1
3
5
7
9
11
Net Profit
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F&O Stratgy for Maruti
Futures are ruling in discount, mainly on account of fresh short positions. Option trading presents a weak trend for the stock.
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F&O for Maruti
The market lost on three out of the five sessions last week on fears of slowdown in the global economy and in the absence of any positive trigger on home front.The market may primarily take cues from the global markets and move accordingly. Meanwhile, the GDP data for the JULY – AUG 2010 quarter, is released which provided some direction to the market. Further, sales and dispatch figures from the automobile and cement manufacturers will also provide some cues for the market’s direction this week and stocks from these sectors may react accordingly.
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FUTURE PLANS:MARUTI
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Industry Market share-• Current market covarge-55%1. Positive trend in automobile industry especially four vehicles.2. Capacity enhancement in Manesar plant, Haryana[600 acres and 300,000
cars/annum.]3. Focusing on hatchback & models due to positive growth of more than 25%
&35% respectively in these category.4. Enhancing network-i. Covering more cities ii. True value outletsiii. Dealer workshopiv. Service network5. Launching new carsI. EECO- The Family CarII. Brand extension of most reliable car of Maruti Alto as Alto k10III. working on a small as well as economical car to counter TATA NANO.6. Putting huge cost on R&D on new advanced KB engine to be at par with
JAPAN.
Maruti Suzuki
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• MARUTI – increased in terms of sales but decreased in terms of EBITDA & PAT in last year due to invest a lot in internal expenditure . In near future company will follow cost cutting to recover .
• Trying to less the margin between domestic & export sales volume to have global exposureI. World class port infrastructure .II. More efficient logistics.
• Perception about domestic market growth in FY 10 at 5%.
Huge customer potentialI. Rural Maket-8% of Maruti salesII. Government Employees- 15% of Maruti Sales
Huge investment- Cash Position : 32 bn rupees(as on 31st Dec 2008)I. FY 10- 29 bn Rs.II. FY 11- 13 bn Rs.III. FY 12 – 04 bn Rs.
CSR- I. National Road Safety Mission: NRSMII. Institute of Driving Training & Research: IDTR at Gujrat, Haryana &
Uttarakhand.
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TATA MOTORS• Market Share : Net revenue is increased 63% in first quarter of FY 2010-2011 as comparison to FY 2009-1010 by which making some expansion plans Tata Motors in set to capture four wheeler market in india.
Going Global: TATA is set to get some global exposure after acquiring Jaguar & Land Rower. Tata got a huge business of JLR in china recently.
Expanding production capacity.
Innovative INNOVA.
Expanding value based network.
CSR activities.
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Recommendations
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Maruti Suzuki
•Awarded the highest financial credit rating of AAA/stable (LT) and P1+ (ST).• Rise in Yen and fall in Rupee.•New launches by Maruti Suzuki.•Share holding pattern :- 2% dependency on public.•India's top automaker Maruti Suzuki plans to invest $1.3 billion over the next three years on manufacturing plants to boost capacity.•Sales of vehicles in the domestic market increased to 870,790 as compared to 722,144 in the previous year showing a growth of 21%.
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Tata motors Share holding pattern :- 11% dependency on public . The Company recorded a sale of 633,862 vehicles in 2009-
10, a growth of 34% over previous year (472,885 vehicles) in the domestic market in India, representing a 25.5% share in the industry (improving from 24.4% share in the previous year).
Change of Ratan Tata. Tata Motors plans to invest Rs9,000 cr over three years.