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Old 20th December 2018, 14:02   #331
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Default Re: Guide: Investing in shares of the automotive sector

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Tata Motors, Maruti Suzuki among top five in India's most attractive brands index 2018
Home-grown auto majors Tata Motors and Maruti Suzuki have made entry in the top five of the India's most attractive brands index, which was topped by Korean mobile phone manufacturer Samsung.
After showing a phenomenal market performance this year, Tata motors has charted a massive jump from 181st rank last year to 2nd rank in India's Most Attractive Brands 2018 study, carried out by Trust Research Advisory (TRA).
Source.The original report was published by TRA research can be found here. Attaching the full list pdf here, the full report is available on their site if anyone wants to take a look.
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File Type: pdf AllIndiaMAB18.pdf (124.1 KB, 295 views)
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Old 28th January 2019, 12:50   #332
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Default Re: Guide: Investing in shares of the automotive sector

Just received this note from my broker.

Maruti Suzuki - Negative January 28, 2019
CMP (Rs) 6,516

Worst OPM in five years, PAT falls 17% yoy
Maruti Suzuki (MSIL) reported a dismal performance in Q3 FY19 with operating profit and PAT comining in lower than estimates by 29% and 14% respectively. Opertaing profit slumped 36.4% yoy, OPM nosedived 594bps yoy and PAT fell 17.2% yoy. OPM at 9.8% is lowest since Q3 FY13. The fall in margins was due to rise in commodity prices, heavy discounting, adverse currency movements and higher sales promotion expenses. MSIL invested resources in correcting ~90,000 additional stock with dealers, which further dragged margins. Higher other income and lower tax rate restricted the fall in PAT to 17.2% yoy.

Outlook muted, valuations expensive
We expect demand for passenger cars to be subdued in the medium term on the back of weak consumer sentiment backed by higher interest rates, firm fuel prices and increase in vehicle prices (led by additional costs of emission and safety norms). In such tough conditions, competition for MSIL is heating up with several new model launches lined up by OEMs. Also, significant top management rejigs have been seen in OEMs who are planning to increase their long term focus on India. This makes us believe that MSIL will lose market share and will see mid single digit volume CAGR in the next couple of years. Margins will be substantially lower (13-14% range in FY19-21E v/s 15%+ in FY16-18) on the back of operating deleverage likely to arise from lower than optimal utilization of the Gujarat plant and higher sales promotion expenses to counter the competitive intensity. Resultantly, we expect FY18-21E earnings CAGR of 5%. Considering this, FY20E P/E of 23.3x appears expensive.
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Old 28th January 2019, 19:34   #333
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Default Re: Guide: Investing in shares of the automotive sector

All tyre stocks have taken a beating (Apollo, CEAT, MRF, JK, Goodyear). I think these are good "buys" as inputs costs have come down Q3 onward and should improve margins. And all the noise against IC engines and all the fanfare about EVs does not affect tyres which will always be required.

Any opinions?
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Old 28th January 2019, 20:43   #334
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Originally Posted by anandpadhye View Post
All tyre stocks have taken a beating (Apollo, CEAT, MRF, JK, Goodyear). I think these are good "buys" as inputs costs have come down Q3 onward and should improve margins. And all the noise against IC engines and all the fanfare about EVs does not affect tyres which will always be required.

Any opinions?
I am closely watching Balkrishna. Its becoming more and more buy-able (if I may coin this word) but I think there's still more pain for tyre companies. I will wait bit more before I start accumulating it.
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Old 28th January 2019, 21:01   #335
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by anandpadhye View Post
All tyre stocks have taken a beating (Apollo, CEAT, MRF, JK, Goodyear). I think these are good "buys" as inputs costs have come down Q3 onward and should improve margins. And all the noise against IC engines and all the fanfare about EVs does not affect tyres which will always be required. Any opinions?
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Originally Posted by joslicx View Post
I am closely watching Balkrishna. Its becoming more and more buy-able (if I may coin this word) but I think there's still more pain for tyre companies. I will wait bit more before I start accumulating it.
Of the lot, I prefer Goodyear (commercial segment), TVS Srichakra (two and three wheeler segment) and Balkrishna Industries (heavy commercial vehicles - exports segment) primarily because they have stable margins and consistent dividend payout.

Primary threat for MRF/Apollo/JK/Ceat is imports from China.
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Old 29th January 2019, 09:15   #336
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Default Re: Guide: Investing in shares of the automotive sector

what's happening with PPAP which was once favourite of this forum? Its halved from the peak of 650 within a year. Is it a good buy now?
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Old 29th January 2019, 09:27   #337
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what's happening with PPAP which was once favourite of this forum? Its halved from the peak of 650 within a year. Is it a good buy now?
Why would you say PPAP was once the "favorite" of this forum? As I mentioned in Post No. 3, it is best to buy small auto component companies at book value. When you buy at such low valuations, your dividend yield will be pretty good.

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MY TAKE: PPAP Automotive's networth is around Rs. 210 Cr (196 + 14 Cr) but its market cap is around Rs. 515 Cr. This means the Price to Book Value is around 2.3. I would buy a stock like PPAP Automotive only at P/BV of less than 1 - that is when market value is equal to networth of the company. Current price of PPAP stock is Rs. 368 but the fair value according to me is 368/2.3 = Rs. 160
Despite the big fall, PPAP is still trading at 1.43 times networth. Since the current market price is Rs. 292, fair value at which I might consider buying PPAP is 292/1.43 = Rs. 204

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Old 29th January 2019, 09:53   #338
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Default Re: Guide: Investing in shares of the automotive sector

https://www.livemint.com/market/mark...608176019.html
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Old 30th January 2019, 10:29   #339
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Of the lot, I prefer Goodyear (commercial segment), TVS Srichakra (two and three wheeler segment) and Balkrishna Industries (heavy commercial vehicles - exports segment) primarily because they have stable margins and consistent dividend payout.

Primary threat for MRF/Apollo/JK/Ceat is imports from China.
One very interesting company (although not directly a tyre company per se) is PTL enterprises. Its owned by the Apollo tyres and it holds land in Kerela which it leases to its parent (apollo tyres) and earns a rental income (presently it is 60cr per year). Its kind of annuity income only for the company and they hardly have any expenses (OPM is almost 95%). Most of it they distribute as dividend (at present price, the dividend yield is 5%) and rest is used to buy investments (I think mostly their own shares).

Now the interesting part is the valuation. At present price (~40 rupee per share) it has Mcap of 260cr while the land holding itself is worth more than 550cr! The book value of each share is 70 rupees. PE is around 5. There is no debt on the books.

It really is an interesting company!
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Old 8th February 2019, 13:43   #340
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Tata Motors Slumps On Posting Biggest Quarterly Loss Ever

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Tata Motors shares fell as much as 29 per cent on Friday, a day after the carmaker reported its biggest quarterly loss. On the National Stock Exchange (NSE), Tata Motors shares plummeted to Rs. 129 during Friday's session - lowest level in at least a year, as against their previous close of Rs. 182.85. Tata Motors had post-market hours on Thursday reported a surprise net loss in the October-December quarter, on account an asset impairment charge of Rs. 27,838 crore for its subsidiary Jaguar Land Rover.
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Old 8th February 2019, 13:51   #341
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Default Re: Guide: Investing in shares of the automotive sector

Whats the absolute lowest price that we can expect TATA Motors shares to hit?
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Old 8th February 2019, 13:53   #342
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[b]Tata Motors Slumps On Posting Biggest Quarterly Loss Ever
Looks like some kind of accounting jumla. This move will add approximately Rs. 2,700 crores to net profits every year because of reduction in depreciation charges. What's interesting is that Tata Motors India division (cars + CVs) clocked a net profit of Rs. 600+ crores this quarter

Last edited by SmartCat : 8th February 2019 at 14:00.
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Old 14th February 2019, 20:26   #343
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Default Re: Guide: Investing in shares of the automotive sector

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Looks like some kind of accounting jumla. This move will add approximately Rs. 2,700 crores to net profits every year because of reduction in depreciation charges. What's interesting is that Tata Motors India division (cars + CVs) clocked a net profit of Rs. 600+ crores this quarter
Why would they decrease depreciation to pay higher tax?

According to accounting rules, the value of an asset is impaired when the sum of estimated future cash flow from that asset is less than the book value of the asset. So, to me it is clear that this is an admission by the management that some of their past investments/ bets have not worked out. Now what are those is not clear. I suspect JLR had invested quite a bit in clean diesel tech - which is now out of favor. Or perhaps a lot of their investments in electric / autonomous cars have not yielded results ( have read that JLR electric offerings are not upto the mark), or could be that they over invested in China.
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Old 28th March 2019, 14:15   #344
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Default Re: Guide: Investing in shares of the automotive sector

Beginner in stocks, went through the first few posts multiple times and zeroed in on Hero Motocorp for medium to long-term holding.

Everything for Hero Motocorp checks except the last 3 years returns which are only going down. I could ignore it given that the plan is to hold this stock for a long time.

But then there was the Auto-Expo line-up which would truly be a nightmare to an investor given what TVS & Bajaj are doing in the same space.

Why should someone still buy Hero today?
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Old 28th March 2019, 14:55   #345
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But then there was the Auto-Expo line-up which would truly be a nightmare to an investor given what TVS & Bajaj are doing in the same space. Why should someone still buy Hero today?
Auto Expo is not a very good technical or fundamental indicator for judging an automobile company.

- Does Hero Motorcorp still have a solid brand value in towns and cities?
- Is the stock cheap? (PE ratio, dividend yield etc)
- Is the company financially strong? (debt to equity ratio, ROE, dividend payout ratio etc)
- Are the profits and sales rising every year consistently?

These are the aspects you need to look at, and then take a call.
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