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Old 29th October 2018, 11:25   #301
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Default Re: Guide: Investing in shares of the automotive sector

What is happening with Motherson Sumi. The stock has nosedived. Is it worth holding on to it? Please advise.

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Old 29th October 2018, 12:07   #302
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by smartcat View Post
Motilal Oswal channel checks suggest October 2018 festival season has been quite poor for 2W and passenger vehicle sales:
Can I request for your opinion on Maruti Suzuki, post the current results, what exactly is not going right for the company? Is it just a minor bump in its run or rivals are catching up or it's people's fatigue with the brand.
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Old 29th October 2018, 14:49   #303
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by bhavik.1991 View Post
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.
Two consecutive quarters of operational losses. In case of Interglobe, wondering whether to sell or not is a fair question.

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Originally Posted by NFS2024 View Post
What is happening with Motherson Sumi. The stock has nosedived. Is it worth holding on to it? Please advise.
But in case of Motherson Sumi, it does not make sense to think along those lines. You are looking at stock price fall from peak and your "losses", instead of financial performance.

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Can I request for your opinion on Maruti Suzuki, post the current results, what exactly is not going right for the company? Is it just a minor bump in its run or rivals are catching up or it's people's fatigue with the brand.
10% drop in quarterly profit is acceptable. It happens! Reasons could be Kerala floods or higher sales to Uber/Ola/others (8% of sales) or higher raw material costs. Next couple of quarters could be challenging going by Motilal Oswal report and NBFC funding issues:

https://www.team-bhp.com/forum/india...ler-sales.html (NBFC liquidity crisis may slow down car & two-wheeler sales)
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Old 30th October 2018, 05:59   #304
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by smartcat View Post
Two consecutive quarters of operational losses. In case of Interglobe, wondering whether to sell or not is a fair question.



But in case of Motherson Sumi, it does not make sense to think along those lines. You are looking at stock price fall from peak and your "losses", instead of financial performance.



10% drop in quarterly profit is acceptable. It happens! Reasons could be Kerala floods or higher sales to Uber/Ola/others (8% of sales) or higher raw material costs. Next couple of quarters could be challenging going by Motilal Oswal report and NBFC funding issues:

https://www.team-bhp.com/forum/india...ler-sales.html (NBFC liquidity crisis may slow down car & two-wheeler sales)
And now Motherson Sumi jumps up by more than 43% (160 to 229) in 1 day!!
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Old 30th October 2018, 11:00   #305
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Default Re: Guide: Investing in shares of the automotive sector

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And now Motherson Sumi jumps up by more than 43% (160 to 229) in 1 day!!
Looks like I'm missing something here.

Wasn't this trading at 250 odd for quite a while, just a few days back? And now suddenly I see it at 160 directly, and weird thing is, even Google Finance shows last few days history around the 150-160 mark only. What's going on?
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Old 30th October 2018, 11:23   #306
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by Parth46 View Post
Looks like I'm missing something here.

Wasn't this trading at 250 odd for quite a while, just a few days back? And now suddenly I see it at 160 directly, and weird thing is, even Google Finance shows last few days history around the 150-160 mark only. What's going on?
All this is due to Bonus issue. 1 Bonus share for every two shares held on Record date i.e 31/10/2018 (Please note that the share price is adjusted Today itself).
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Old 30th October 2018, 11:26   #307
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by Parth46 View Post
Looks like I'm missing something here. Wasn't this trading at 250 odd for quite a while, just a few days back? And now suddenly I see it at 160 directly, and weird thing is, even Google Finance shows last few days history around the 150-160 mark only. What's going on?
Looks like the stock went ex-bonus today. When this happens, share price is adjusted for the bonus so that your net gain is zero.
https://www.moneycontrol.com/company...us/MSS01#MSS01

1:2 bonus means you get 1 share free for every 2 shares held. Those free shares will be credited to your account in a week or two. Eg: if you had 100 shares @ Rs. 240, now you will have 150 shares @ Rs. 160.

Don't ask why companies offer 'bonus' shares. It's been 18 years since I started investing and I still don't know why companies do this. When companies offer bonus shares -> you originally had 1 large slice of pizza but now you have 2 smaller slices of the same pizza.
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Old 30th October 2018, 11:32   #308
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by hillsnrains View Post
All this is due to Bonus issue. 1 Bonus share for every two shares held on Record date i.e 31/10/2018 (Please note that the share price is adjusted Today itself).
Quote:
Originally Posted by smartcat View Post
Looks like the stock went ex-bonus today. When this happens, share price is adjusted for the bonus so that your net gain is zero.
https://www.moneycontrol.com/company...us/MSS01#MSS01

1:2 bonus means you get 1 share free for every 2 shares held. Those free shares will be credited to your account in a week or two. Eg: if you had 100 shares @ Rs. 240, now you will have 150 shares @ Rs. 160.

Don't ask why companies offer 'bonus' shares. It's been 18 years since I started investing and I still don't know why companies do this. When companies offer bonus shares -> you originally had 1 large slice of pizza but now you have 2 smaller slices of the same pizza.
Thanks a lot to both of you for the quick heads-up.

I bought a small chunk at 232-odd a few days back, and got a mini cardiac arrest today seeing it at 160. Not because of the "fall" per se, but on noticing the history on Google Finance, I thought I'd mistakenly bought the wrong stock

Even the 52-week lo/hi numbers didn't match up either, so I really felt like I made a mistake, but now it's clear. Will wait for the "bonus" to get credited.
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Old 30th October 2018, 16:09   #309
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Default Re: Guide: Investing in shares of the automotive sector

I will avoid the automotive sector like the plague. We do not yet know the future. Otherwise, we risk investing in a dying technology. At one time Kodak was king in the photography sector and today ....
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Old 30th October 2018, 19:57   #310
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by smartcat View Post
Two consecutive quarters of operational losses. In case of Interglobe, wondering whether to sell or not is a fair question.
https://economictimes.indiatimes.com...w/66423453.cms

Though such tactics can be argued ethically, it will certainly reflect positively on balance sheet in coming quarters.
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Old 31st October 2018, 15:53   #311
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Default Re: Guide: Investing in shares of the automotive sector

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I will avoid the automotive sector like the plague. We do not yet know the future. Otherwise, we risk investing in a dying technology. At one time Kodak was king in the photography sector and today ....
I wholeheartedly agree. Passive investors should definitely stay away from Auto sectors & active investors should be mentally prepared to book losses straight away in case of something disruptive stuff is announced by a company one is not invested in.
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Old 31st October 2018, 17:21   #312
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Default Re: Guide: Investing in shares of the automotive sector

I think the recent correction in the auto sector is purely a case of valuations coming down to reasonable levels. It is customary to highlight Maruti which has corrected 30% from its peak. The company is doing fine but when share prices have increased a lot, very high expectations are built by people and even a minor blip in overall performance is punished brutally. I think Maruti is slowly trending towards its fair value which means that you should monitor its price performance and keep your cash ready but not invest into it right away. People tend to forget that achieving 2-3 years of >10% volume growth does not mean that the company can manage to grow at similar rates. The already high volumes churned out by Maruti means it will be more difficult to grow further from this point.
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Old 31st October 2018, 20:04   #313
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by sgiitk View Post
I will avoid the automotive sector like the plague. We do not yet know the future. Otherwise, we risk investing in a dying technology. At one time Kodak was king in the photography sector and today ....
With that logic, I think it is best to avoid any company's stocks. HUL maybe devoured by Patanjali, consumer durables maybe replaced by a shared service or pay-as-you-go model reducing sales of assets and ultimately reducing business.
Uber was going to sound the death knell for auto companies with ownership going to drive down significantly. However, companies adapted with their own version of self driving, ownership model etc.
The steps that companies take after these changes determines their worth and generally you can invest in such companies who show these capabilities. For example, Maruti is trying to use Li-on batteries in regular cars. This means they are testing manufacturing methods and may be successful in reducing costs in the future when everything is slated to be electric. They have tied up with Toyota for covering themselves on self driving.
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Old 7th November 2018, 13:55   #314
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Default Re: Guide: Investing in shares of the automotive sector

So far I have not invested in the 2W segment, but seeing the increase in their numbers year-on-year, I feel this could be a good long term bet. Keyword being "feel".

Observing the trend it looks like scooters can be the growth drivers in the cities. Bikes maybe huge in the rural areas but in the cities, the scooter seems to be winning. Honda is the undisputed king, but of late I see TVS is picking up. The problem with TVS is they don't have any bikes so to say, to supplement their scooter segment. While the other 2 players, Bajaj and Hero do have good to great bike volumes as well, but they lack somewhat in the scooter segment. Will have to do number crunching but I do see some negatives with all 3 of them.

Bajaj - No star scooter product, or is there any? Sales, profit growth in the past 5 years has been just about 5-6%. They don't have debt and offer good dividends. They seem to be headed in a different direction of focusing on performance bikes which attract the younger folks. This may play out well for them in the future. Not sure what their roadmap of scooter segment is.

Hero - They have 4 or 5 scooters on sale, but none of them seem to have a strong brand recall. Like they have a Splendor in the commuter bike segment for example. Speaking of bikes, they mostly have rebranded bikes from their Honda collab days, not sure what the future growth prospects are (in the long term). On the flipside, they have no debt, offer decent dividends.

TVS - Jupiter seems to be a hit, past 5 year sales and profit growth have increased by 15 and 29%. But, they have debt (its not alarming, interest payments are only about 5% of their profits) and pay out lesser dividends.

In the coming weeks, I am going to tag along a friend who is looking for a scooter for neighbourhood use mainly - will give me an idea about how each of them value the potential customer.

If anybody has any thoughts on any of these players or how the scooter market will develop, please do pitch in.
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Old 7th November 2018, 15:06   #315
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The electric scooters are on the anvil, with Ather set to start delivery in Jan. Hero is an investor in Ather. I'm sure others have also invested in startups working in this space.

I expect Hero to use the Ather's R & D , tech and produce a mass market electric scooter/bike down the line.
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