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Old 3rd October 2018, 13:27   #286
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by adithya.kp View Post
Maruti reported a MoM (2017 vs 2018) degrowth in volume for the last 3 months. Before that, they used to do a healthy 20%+. July degrowth was attributed to the truckers strike. I thought it was a one off. But even August and September showing a degrowth in volume.
I dont think the base was high. So high base effect ruled out. What could be the reason?

Disclosure: I dont hold Maruti
Couple of possible factors.
  • Negative August growth was attributed by floods in Kerala that too during Onam.
  • Negative September growth was attributed by high base. During previous year, sales number were high in September due to possibility of revision of GST on cars. Also, festival started during September previous year.
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Old 4th October 2018, 15:51   #287
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Default Re: Guide: Investing in shares of the automotive sector

Hi all. What are your views on Interglobe Aviation (Indigo) as of now? The price has fallen quite a bit, and P/E is around 21. Do you feel that it can give good returns over the medium term, once oil prices cool off a little or the aviation sector picks up? Also with Jet Airways in doldrums, do you think this will provide Indigo an opportunity to get more market share? Would like to hear your views on this stock.

P.S. - I am marginally invested in Indigo.
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Old 7th October 2018, 09:33   #288
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Default Re: Guide: Investing in shares of the automotive sector

I doubt one state will have a meaningful impact on the overall growth. (For August)
I looked at the September numbers for 2016 and 2017. The base is not high in 2017. (Sept 16, 1.34 lac cars. Sept 17, 1.50 lac cars. Which indicates Sept 17 was not a very high growth month)
So it appears, there is some slowdown. Could it be because of the poor macro? ( Specifically the crude oil.). Is fuel price that important for the end consumers? . If we look at 2013 data, we might get some clue. (I dont have the data though)

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Originally Posted by bhavik.1991 View Post
Couple of possible factors.
  • Negative August growth was attributed by floods in Kerala that too during Onam.
  • Negative September growth was attributed by high base. During previous year, sales number were high in September due to possibility of revision of GST on cars. Also, festival started during September previous year.
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Old 7th October 2018, 10:46   #289
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Default Re: Guide: Investing in shares of the automotive sector

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Hi all. What are your views on Interglobe Aviation (Indigo) as of now? The price has fallen quite a bit, and P/E is around 21. Do you feel that it can give good returns over the medium term, once oil prices cool off a little or the aviation sector picks up? Also with Jet Airways in doldrums, do you think this will provide Indigo an opportunity to get more market share? Would like to hear your views on this stock.
Very difficult to value a stock like Indigo because its profits are uneven. PE of 20 might become PE of 40 if profits drop by 50%. But Indigo is a solid brand with 45% marketshare - so we can't value it based on price to book value either. Among other positives, return on equity has been consistently high and debt to equity ratio is reasonable too.
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Old 7th October 2018, 21:49   #290
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Default Re: Guide: Investing in shares of the automotive sector

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Hi all. What are your views on Interglobe Aviation (Indigo) as of now? The price has fallen quite a bit, and P/E is around 21.
...
P.S. - I am marginally invested in Indigo.
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Originally Posted by smartcat View Post
Very difficult to value a stock like Indigo because its profits are uneven. PE of 20 might become PE of 40 if profits drop by 50%. But Indigo is a solid brand with 45% marketshare - so we can't value it based on price to book value either. Among other positives, return on equity has been consistently high and debt to equity ratio is reasonable too.
I was looking at this stock yesterday. The stock is near its 3 year low. (courtesy screener.in ). However, apart from what smartcat stated, my own experience with Airline stocks have not been good ( i own a miniscule share in Jet). So i am in dilemma. Indigo is one of the best performing airline in India. Stocks are trading at 3 year low. Should I bet on this one?

An alternate thought. Are there airline ancillaries (like auto ancillaries) that we could investigate? With the high fuel prices driving the stock prices of airlines down, we could have good midcap in this sector.

PS: I am anyway placing small order for Indigo tomorrow
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Old 7th October 2018, 23:01   #291
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Default Re: Guide: Investing in shares of the automotive sector

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An alternate thought. Are there airline ancillaries (like auto ancillaries) that we could investigate? With the high fuel prices driving the stock prices of airlines down, we could have good midcap in this sector.
One airline ancillary company I can recommend is Aacelya Kale Systems. It's an IT company that provides IT services for the airline industry. It's really really a great company available for decent valuation right now, given the prevailing headwinds in this sector. The company is completely debt free, generates tons of free cash and gives a very very generous dividend every year. I think it is a good contrarian bet right now (you can bet on oil prices cooling down sometime in future which would mean airline industry will make a comeback and that would positively help a company like Kale.)
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Old 7th October 2018, 23:20   #292
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Default Re: Guide: Investing in shares of the automotive sector

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One airline ancillary company I can recommend is Aacelya Kale Systems. It's an IT company that provides IT services for the airline industry.
I bought Accelya 3 or 4 years back . It's not an India-specific airline traffic growth story like Interglobe though. Revenues and profitability depend on global growth in aviation.

On similar lines then, another "aviation" stock worth looking at would be Hindustan Aeronautics Limited. Being a PSU, it is ignored by most institutional and retail investors. But that's not a bad thing since it allows you to keep accumulating HAL over time. Eventually value stocks like HAL will make money for investors once it is "discovered". Till then, you get paid 4% tax free dividends for holding the stock.

Other defence PSUs like Cochin Shipyard, Bharat Electronics and Bharat Dynamics (they make missiles) are worth looking at too. Guaranteed long term business, zero debt, decent RoE, investor apathy/low valuations, reasonable profit growth (10 to 15% per annum), above average dividend yield are some of the strengths of such companies.
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Old 10th October 2018, 23:28   #293
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Default Re: Guide: Investing in shares of the automotive sector

Brokerage report on Tata Motors:

Guide: Investing in shares of the automotive sector-screenshot_20181010231836.png

Full report available from trendlyne.com (requires registration via Facebook)
https://trendlyne.com/research-repor...otors-ltd/#_=_
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Old 14th October 2018, 21:45   #294
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Default Re: Guide: Investing in shares of the automotive sector

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I bought Accelya 3 or 4 years back . It's not an India-specific airline traffic growth story like Interglobe though. Revenues and profitability depend on global growth in aviation.
I invested in Accelya, when it was still Kale, that has turned out to be a multibagger several times over :-) , and oddly was not a hot stock till the time they started giving huge dividends.


Another similar stock (different sector) I've started looking at is Majesco, given its P/E looks like it has already been 'discovered' :-), but have started buying in dips.

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On similar lines then, another "aviation" stock worth looking at would be Hindustan Aeronautics Limited. Being a PSU, it is ignored by most institutional and retail investors...................
HAL for whatever reason has had negative news the past few months.. with Rafael, cash at hand issues etc. Been accumulating the stock since the IPO (unfortunately the price keeps decreasing with time), with the assumption that IAF will not switch majorly to the Pvt. sector. The LCA though seems to be a dud investment now and a major downer for showcasing HAL's capabilities.
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Old 14th October 2018, 23:23   #295
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Default Re: Guide: Investing in shares of the automotive sector

I am not quiet familiar with stocks, hence this silly query! While searching for various automobile stocks, I found Hindustan Motors still listed, stock price is around 7.0INR.


How does the company sustain without any products or services? do they have any other means of business or will there be any business tie up? they have sold the Ambassador brand for 80CR INR and some kind of agreement has been mentioned, does that mean they will get royalty if the name is reintroduced.
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Old 15th October 2018, 00:12   #296
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Default Re: Guide: Investing in shares of the automotive sector

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How does the company sustain without any products or services? do they have any other means of business or will there be any business tie up? they have sold the Ambassador brand for 80CR INR and some kind of agreement has been mentioned, does that mean they will get royalty if the name is reintroduced.
Rs. 80 cr is one time payment that they received. They will not receive regular royalty income from the Peugeot deal. HM does not have any operational business - so revenues will be remain zero. It's a matter of time before it gets delisted. The company's marketcap is Rs. 150 cr probably because they have land assets.
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Old 28th October 2018, 23:11   #297
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Default Re: Guide: Investing in shares of the automotive sector

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I was looking at this stock yesterday. The stock is near its 3 year low. (courtesy screener.in ). Indigo is one of the best performing airline in India. Stocks are trading at 3 year low. Should I bet on this one?
Sept quarter results are out & it reported loss for the first time since they started their operation. I haven't booked losses yet because I am hopeful that fuel prices will come down; will wait for results of next couple of quarters.
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Old 29th October 2018, 00:16   #298
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Default Re: Guide: Investing in shares of the automotive sector

I got a message from my provider that Indigo's past may be dug deeper as they posted a bad quarter all of a sudden. The advice is to avoid Indigo & other aviation stocks. I have nothing (shares) from that domain though.
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Old 29th October 2018, 10:23   #299
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Default Re: Guide: Investing in shares of the automotive sector

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Sept quarter results are out & it reported loss for the first time since they started their operation. I haven't booked losses yet because I am hopeful that fuel prices will come down; will wait for results of next couple of quarters.
I dont go quarter by quarter. My rationale to buy was, the sector itself is down. Hence, its a good time to buy good stocks in this sector.

Indigo has consistent sales growth, profits so far and healthy dividend, ROCE.
Overall it has performed better than its peers. I expect the Indigo business to perform well for 2 more years. I will hold their stocks till then.

PS: I am not financial advisor. post my earlier message, i acquired small quantity of the said stock.

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I got a message from my provider that Indigo's past may be dug deeper as they posted a bad quarter all of a sudden. The advice is to avoid Indigo & other aviation stocks. I have nothing (shares) from that domain though.
I attributed the loss, to overall oil prices and dollar rates. Will keep my eyes open on the sector. If you get any concrete news, kindly share

Last edited by druva : 29th October 2018 at 10:24. Reason: spelling mistakes
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Old 29th October 2018, 10:27   #300
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Default Re: Guide: Investing in shares of the automotive sector

Motilal Oswal channel checks suggest October 2018 festival season has been quite poor for 2W and passenger vehicle sales:

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