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Old 10th November 2017, 23:13   #151
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Default Re: Guide: Investing in shares of the automotive sector

How are battery manufacturers expected to perform given that, in 10 years of so the EV scene would be very different. Would Amararaja or Exide be a good investment now?
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Old 12th November 2017, 23:58   #152
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by DudeWithaFiat View Post
How are battery manufacturers expected to perform given that, in 10 years of so the EV scene would be very different. Would Amararaja or Exide be a good investment now?
Short term (3 years) very positive because of growth in all automotive sectors plus developments in e-rickshaw scene. Also, a significant percentage of their revenues come from exports, Home UPS and telecom tower backup power supply. Amara Raja says they will double their revenue in 3 to 4 years

Amara Raja Batteries aims to be Rs 10,000-crore firm in 3 yrs
http://www.moneycontrol.com/news/bus...s-2436355.html

Not sure about 10 or 20 year scene. Both Exide and Amara Raja talk about lithium ion / other EV battery storage technology in their annual reports. But they will not invest in manufacturing such batteries, unless asked by car manufacturers.

Come to think of it - I don't think Amara Raja or Exide has any advantage in manufacturing of Lithium ion batteries, over a new well funded startup. Or moneybags like Reliance Industries. Because lead acid battery tech and lithium ion battery tech is so different.

At lower prices, I will buy Exide & Amara Raja. No point worrying about 10 or 20 year future of companies. Stock markets look ahead, but not THAT ahead.
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Old 14th November 2017, 13:12   #153
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Default Re: Guide: Investing in shares of the automotive sector

An exceptional thread, smartcat! I had zero information about stocks until a fortnight back and I'm quite a layman here. I've already started a practice account with Investopedia for some know-hows on the investing game. This thread has a vast amount of wisdom to take in from other fellow members too.

Since I'm a newbie to the whole game, someone might discern how dumb am I pertaining to the question I'm about to ask. But owing to the fact that I'm still in the learning phase, I deserve a pardon

During the process of share trading (either buying or selling), do we need to care more about the dividend that we get payed or the total return (profit/loss) when selling the share at a particular time.?
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Old 14th November 2017, 13:45   #154
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Default Re: Guide: Investing in shares of the automotive sector

Hi Smartcat, can you evaluate this company? They are into automotive components, casting and established as an ancillary of Eicher and Volvo.

http://www.porwalauto.com/
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Old 14th November 2017, 18:36   #155
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Default Re: Guide: Investing in shares of the automotive sector

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During the process of share trading (either buying or selling), do we need to care more about the dividend that we get payed or the total return (profit/loss) when selling the share at a particular time.?
Preferably both - high dividend yield and good long term profit growth prospects (which will result in higher capital gains). Since I'm a conservative investor, of the two, I would prefer higher dividend yield. Aggressive investors prefer capital gains and do not care much about dividends.

So if there is a company that is growing at 30% per annum but not paying any dividend, I will NOT buy such a stock. As a corollary, if there is a company that is not growing much but available at a price that gives 4 or 5% dividend yield, I would rather buy that.

Primarily because I don't trust managements after Satyam, Worldcom, Enron scams. If there is company that says they have made Rs. 100 cr profit, how do you know it is true? All numbers can be faked. But if there is a company that says they have made Rs. 100 cr profit and is paying out Rs. 50 cr to shareholders as dividends, then yeah, you know those profit numbers are real.

Remember - profits can be faked, dividends cannot.

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Originally Posted by hrman View Post
Hi Smartcat, can you evaluate this company? They are into automotive components, casting and established as an ancillary of Eicher and Volvo. http://www.porwalauto.com/
I'm not sure what "established as an ancilliary of Eicher & Volvo" (as mentioned on the website) means. The promoters are different, so its likely that Eicher is just their client.

Let's look at their financial performance:

Guide: Investing in shares of the automotive sector-history.jpg

1) Sales & operating profit growing at 10% CAGR. Good!
2) FY09, FY10 & FY14 - they suffered losses. Red flag! Means the probability of Porwal Auto suffering badly during the next downturn is higher
3) They never paid any dividends till FY15. But in FY16 and FY17, they paid out 30% of their profits as dividends (look at the "dividend payout" row). This is an extremely good sign. That means the management is confident about the future of the company.

Let's now look at the stock's valuations:

Guide: Investing in shares of the automotive sector-porwal.jpg

1) Market cap of Porwal Auto Components is Rs. 86 cr. Such stocks are called MICROCAP STOCKS and can go up 10x times in 3 years or lose 90% of its value in one year.
2) PE of 19 and dividend yield of 0.9% means valuations are high. However, if profits double (and with micro caps, it is a possibility), then looking at current PE ratio/ dividend yield does not make sense. Use P/BV ratio for further analysis.
3) RoE is poor.
4) Debt to equity ratio of 0.15. Very good sign for a micro cap stock
5) Price to book value of 1.5 is Okay.

If you like this stock for some reason, buy at a price to book value of 1. That is, at 33% lower price. That will leave enough margin of safety. If you don't like to wait, buy 50% of what you originally wanted to - and buy more in bits if the stock falls.

Last edited by smartcat : 14th November 2017 at 18:39.
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Old 14th November 2017, 18:44   #156
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Default Re: Guide: Investing in shares of the automotive sector

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I'm not sure what "established as an ancilliary of Eicher & Volvo" (as mentioned on the website) means. The promoters are different, so its likely that
Thanks smartcat for the thorough analysis. Will look at a small amount then and take a call as it grows
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Old 19th November 2017, 16:45   #157
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Default Re: Guide: Investing in shares of the automotive sector

I am so happy I am a regular investor in SUNDRMFAST

https://inc42.com/buzz/tesla-tvs-gro...tric-vehicles/
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