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Old 7th November 2018, 19:55   #316
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by Dry Ice View Post
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. 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.
As an investor, it is almost impossible to ride the scooter boom. Unlisted Honda has 80% market share in the scooter segment, and it is unlikely that TVS can gain at Honda's expense.

I suggest you look at two wheeler components space, and see if any company has high exposure to scooters segment. Munjal Auto perhaps? Other option is to buy TVS Srichakra, maker of two wheeler tyres. Third option is to invest in two wheeler finance companies like Muthoot Capital (different from listed Muthoot Finance)
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Old 8th November 2018, 11:56   #317
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Default Re: Guide: Investing in shares of the automotive sector

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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.
Electric scooters can cause some disruption, but I am not sure if they will do so within the next 5 years. More so in our country as you need the charging infrastructure to develop as well for electrics to pick up.

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As an investor, it is almost impossible to ride the scooter boom. Unlisted Honda has 80% market share in the scooter segment, and it is unlikely that TVS can gain at Honda's expense.

I suggest you look at two wheeler components space, and see if any company has high exposure to scooters segment. Munjal Auto perhaps? Other option is to buy TVS Srichakra, maker of two wheeler tyres. Third option is to invest in two wheeler finance companies like Muthoot Capital (different from listed Muthoot Finance)
That's what I discovered walking the streets. Activa is practically synonymous with Scooter and the de-facto choice. Other players like TVS/Hero are gaining mainly due to the attitude of the Honda dealerships. I am talking about the non-enthusiasts here who just want a machine. No test rides, month long waits, high insurance quotes - seems they are milking their market leading position to the hilt. Sadly, as you said, we can't get in Honda.

I don't much understand the financial institutions and have so far held back from investing in any. But now it feels like my investments are gyrating too much towards the auto sector, will read more about 2W/component players before adding another 'auto' equity in my bag.

On a general note, how many equities are too many to hold? There was a time I had almost 25 odd with me. Over time, I have managed to shrink it to about 7 in which I have invested majorly (~70%). The remaining 30% is spread into 7 more, which I plan to reduce to about 3 or 4 by next year end.

Last edited by Dry Ice : 8th November 2018 at 11:58. Reason: typo
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Old 8th November 2018, 12:20   #318
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Default Re: Guide: Investing in shares of the automotive sector

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....
On a general note, how many equities are too many to hold? There was a time I had almost 25 odd with me...
There is no answer to this question. You can hold only 12-15 and make great returns on those. You can hold 100+ and still manage to have good returns on your investments. Everything has a reason, perspective or approach to it.

There is something called as 'Shop Keeper' strategy, wherein you can hold/buy as many stocks as you like and keep rotating simply to generate your desired profit. The idea is that you should never hold any scrip that is more than 5% in weight in your basket. It can be as light as 0.1% but never more than 5% - hence at a time you will have at-least 20 different stocks. You simply have to keep on booking profits and never care about the long-term prospects of the same. That is not your motive in such a case. Of-course you can always combine it here.

I am not recommending the said strategy but just saying that there is no definite answer to 'How many stocks to own?'. It purely depends on what you wish out of it and how you manage your portfolio.

Last edited by sunilch : 8th November 2018 at 12:21.
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Old 8th November 2018, 20:18   #319
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Default Re: Guide: Investing in shares of the automotive sector

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On a general note, how many equities are too many to hold? There was a time I had almost 25 odd with me. Over time, I have managed to shrink it to about 7 in which I have invested majorly (~70%). The remaining 30% is spread into 7 more, which I plan to reduce to about 3 or 4 by next year end.
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Originally Posted by sunilch View Post
There is no answer to this question. You can hold only 12-15 and make great returns on those. You can hold 100+ and still manage to have good returns on your investments. I am not recommending the said strategy but just saying that there is no definite answer to 'How many stocks to own?'. It purely depends on what you wish out of it and how you manage your portfolio.
Agree with Sunil here. Most books and investment gurus say that "small investors" should hold maximum 10 to 20 stocks in their portfolio. But this suggestion does not make any sense to me. As long as you are able to "track" all stocks in your portfolio, you can hold on to as many as you want. Once you have done the initial research and bought a stock, this is how you track its business:

1) Subscribe to Google Alerts for daily or weekly updates on the company. Type the company name (Eg: TVS Motors) as keyword for Google alerts. If Economic Times has an article mentioning increasing market share of TVS in scooters segment, you will be among the first to know.

2) Once in a quarter, check the financial results of the company on moneycontrol, marketsmojo or screener.in. Go to the website and check if they have quarterly investor presentation.

3) Once a year, check the annual results. Don't forget to read the annual report too.

4) Occasionally, look up brokerage reports on www.trendlyne.com

If you can do this for 100 stocks, then go ahead and hold 100 stocks. Most mutual funds hold a large number of stocks, and there is no correlation between returns and number of stocks.
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Old 8th November 2018, 22:28   #320
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Default Re: Guide: Investing in shares of the automotive sector

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There is no answer to this question. You can hold only 12-15 and make great returns on those. You can hold 100+ and still manage to have good returns on your investments. Everything has a reason, perspective or approach to it.
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Agree with Sunil here. Most books and investment gurus say that "small investors" should hold maximum 10 to 20 stocks in their portfolio. But this suggestion does not make any sense to me. As long as you are able to "track" all stocks in your portfolio, you can hold on to as many as you want.

...

If you can do this for 100 stocks, then go ahead and hold 100 stocks. Most mutual funds hold a large number of stocks, and there is no correlation between returns and number of stocks.
I wasn't at ease holding 25+ as I wasn't able to track all of them or the industry they operate in with equal focus. Hence was wondering what others are doing differently, and tracking how many and if I can learn a trick or 2.

@smartcat: Thank you for listing these out, I do follow most of these. But I need to be more regular in reading the brokerage house reports. I mostly search and read Motilal studies for companies that interest me.
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Old 17th November 2018, 10:42   #321
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Default Re: Guide: Investing in shares of the automotive sector

I am a newbie to share market and I am planning to put a small amount of money on Jawa brand as we see strong pull towards retro grade motorcycles nowadays. Need expert opinion on this. I will invest seeing the market pull for the brand in initial 6 months.
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Old 17th November 2018, 12:22   #322
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Default Re: Guide: Investing in shares of the automotive sector

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I am a newbie to share market and I am planning to put a small amount of money on Jawa brand as we see strong pull towards retro grade motorcycles nowadays. Need expert opinion on this. I will invest seeing the market pull for the brand in initial 6 months.
The Jawa brand being introduced by Mahindra will be sold via their subsidiary Classic Legends Pvt. Ltd.

Since Classic Legends Pvt. Ltd. is not listed on the exchanges, you can invest in them only via buying stocks of the parent co - Mahindra & Mahindra Ltd.

However, M&M being a conglomerate has 100s of subsidiaries, in addition to Classic Legends Pvt Ltd - all of which influence the company's revenues, profits and in-turn its stock price. Therefore, it's possible that you may see strong sales of the Jawa brand but that may not always translate to a gain in M&M's stock price.

If you want to know more about M&M's various subsidiaries, I would recommend going through their FY-18 Annual reports - which is available on the BSE website and the M&M website as well.
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Old 17th November 2018, 15:00   #323
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Default Re: Guide: Investing in shares of the automotive sector

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The Jawa brand being introduced by Mahindra will be sold via their subsidiary Classic Legends Pvt. Ltd.
If it's a 100% owned subsidiary the P&L will flow into parent's account BUT if it's owned privately by the management and will use M&M's subsidiaries for components the benefit would be marginal.

These days when they are pretty sure of good returns they go via private route. Just my 2 cents!
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Old 17th November 2018, 15:47   #324
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Default Re: Guide: Investing in shares of the automotive sector

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If it's a 100% owned subsidiary the P&L will flow into parent's account
Correct.

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Originally Posted by JMaruru View Post
BUT if it's owned privately by the management and will use M&M's subsidiaries for components the benefit would be marginal.

Even if M&M doesn't have 100% equity stake in Classic Legends, it'll still have a majority stake, so the pro-rata revenues and earnings of Classic will flow through to M&M and all the other shareholders.

I didn't understand the part about components and the management though. Components may even be manufactured and sold by 3rd party vendors outside the group - but since the sale of the final product is being done via Classic Legends - the revenue will be booked by them as well.

Last edited by sidpunjabi : 17th November 2018 at 15:48.
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Old 27th November 2018, 13:11   #325
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Default Re: Guide: Investing in shares of the automotive sector

Guys,
Recently made my debut in equities. Am only looking at long term holdings as of now.

Considering all the buzz around e vehicles, can the battery OEM stocks be a good investment in long term? Could they prove to be something like MRF over the next ten years?
Case in point being EXIDE or Amaron.
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Old 27th November 2018, 14:15   #326
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Default Re: Guide: Investing in shares of the automotive sector

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Guys, Recently made my debut in equities. Am only looking at long term holdings as of now. Considering all the buzz around e vehicles, can the battery OEM stocks be a good investment in long term? Could they prove to be something like MRF over the next ten years? Case in point being EXIDE or Amaron.
EV battery technology is hugely different from lead acid battery technology. Going by the amount of investment needed to setup a large EV battery factory, it is likely that Mukesh Ambani or M&M or Tatas will take the lead. Exide and Amaron will talk about EV batteries in their annual report, but might not invest heavily in this sector.

Personally, I might have an opinion that EV sales will grow at a rapid pace. I might have an opinion that autonomous cars will be the future. But I will NOT act on this opinion and position myself in certain stocks.

My stock investments will be on based only on hard data available at hand. And that data says electric cars and bikes are sales duds (as of 27th Nov 2018). There seems to be some traction in e-rickshaw segment though.
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Old 5th December 2018, 14:02   #327
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Default Re: Guide: Investing in shares of the automotive sector

S&P cuts Tata Motors credit rating on JLR weakness

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Source.

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Old 6th December 2018, 23:10   #328
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Tata Motors is selling at its lowest price range in five years. Is this a time to accumulate more or shall wait for some time. All my investments are for long term though.
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Old 7th December 2018, 00:36   #329
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Default Re: Guide: Investing in shares of the automotive sector

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Tata Motors is selling at its lowest price range in five years. Is this a time to accumulate more or shall wait for some time. All my investments are for long term though.
Avoid accumulating companies that have a large amount of debt. Don't sell Tata Motors but don't buy more either. But averaging down Maruti or Bajaj Auto is fine since they are almost debt free.
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Old 7th December 2018, 11:39   #330
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Default Re: Guide: Investing in shares of the automotive sector

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Tata Motors is selling at its lowest price range in five years. Is this a time to accumulate more or shall wait for some time. All my investments are for long term though.

Capital allocation is an important factor to look at while investing. Tata group companies do not have a very good record in that. They acquire large amounts of debts and put their money in expensive acquisitions and investments. They tend to over invest when industry is looking in upswing.



So even if you see good sales numbers or products coming financially business may not be still doing well
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