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Old 2nd April 2019, 14:40   #361
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Default Re: Guide: Investing in shares of the automotive sector

Any opinion on the following:

- Motherson Sumi
- Bharat Forge
- Ashok Leyland
- Escorts
- M&M
- Force Motors

Bharat Forge and Force Motors were doing well, but went into a slump, with no sight of significant recovery.

thanks
Srini
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Old 3rd April 2019, 17:33   #362
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by SmartCat View Post
Swaraj engines and VST industries were available at 4% yield in 2015/2016.
Dear Sir

Tata Motors, go or no go? I am having a father of itch in my hand since at least 2 months, what you suggest if I keep a time frame of 2-3 years in mind with an investment ranging anywhere between 1 lac to 4 lac?

Here I am talking about putting a lot of eggs in a single basket.
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Old 3rd April 2019, 18:32   #363
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by VKumar View Post
Tata Motors, go or no go?
Not an expert. But, I would ask myself these questions:
  • Is the Harrier a runaway hit? No!
  • Are Hyundai/Kia/MG Motors coming out with good looking alternatives to make the competition tougher? Yes!
  • Are the JLR woes in China over? No!
  • Is Brexit a big risk to JLR? Yes!
I had your itch too. But, decided the current up move is most likely a short covering bump rather than a structural change.

Rest your call.
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Old 4th April 2019, 14:33   #364
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Default Re: Guide: Investing in shares of the automotive sector

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How about some tips on monitoring stocks and deciding when to sell? Or should our reasons for selling only get impacted by what's happening with the company instead of the general crashes which take the entire market down?
Best way to monitor a company is via Google Alerts. Market crash takes down all stocks - it is just that falls in some stocks are steeper. That does not help you decide which stocks to sell when.

I have a simple rule - if a company's reduces dividend payout below 15% threshold, I get out. But before I exit, I do check the annual report to see what rationale the management gives for slashing dividends. Management slashes dividend payout (as a percentage of profits) to conserve cash - and this is "leading indicator" of trouble.

Large billion dollar acquisitions and rising debt levels are other red flags.

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Originally Posted by venkikewl View Post
with my instinct on a particular news about PVR, thought of investing in it, which my colleagues turned it down. But PVR is performing better after that. Would like to know from gurus over here about what all details we need to look in before investing ( be it short term, long term ).
PVR is trading at a P/E ratio of 47. That makes it expensive. However, this is a consumer facing business growing its revenues at 25% per year. Markets are willing to pay for such growth. I'm not!

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Originally Posted by smsrini View Post
Any opinion on the following:- Motherson Sumi
- Bharat Forge - Ashok Leyland - Escorts - M&M - Force Motors
Both M&M and Ashok Leyland are trading at very low valuations. Not very sure about long term fundamentals of Escorts & Force Motors. I would buy them only a ultra low prices. Motherson Sumi and Bharat Forge are strong companies, but expensive.

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Originally Posted by VKumar View Post
Tata Motors, go or no go? I am having a father of itch in my hand since at least 2 months, what you suggest if I keep a time frame of 2-3 years in mind with an investment ranging anywhere between 1 lac to 4 lac? .
For me, it's a no go. I want to see the debt levels go down before I consider investing.

Last edited by SmartCat : 4th April 2019 at 14:35.
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Old 6th May 2019, 09:23   #365
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Default Re: Guide: Investing in shares of the automotive sector

My nephew aged 16 years is showing keen interest in technical analysis and investing, he has access to zerodha account and has built an fantasy portfolio. He is good in maths and can grasp basics of accounting, company financials... even though its a hobby at this phase, I want him to read some good investment books ideal for his age without overwhelming him, can you all suggest some good books which can I recommend?
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Old 6th May 2019, 09:27   #366
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Default Re: Guide: Investing in shares of the automotive sector

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For me, it's a no go. I want to see the debt levels go down before I consider investing.
And Tata Motors through JLR is rumoured to want to acquire a major taxi company called Addison Lee in the UK. Unless, they are planning to dump Hexa's as taxicabs in the UK, I see no business sense for this acquisition
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Old 12th May 2019, 15:56   #367
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by mazda4life View Post
My nephew aged 16 years is showing keen interest in technical analysis and investing, he has access to zerodha account and has built an fantasy portfolio. He is good in maths and can grasp basics of accounting, company financials... even though its a hobby at this phase, I want him to read some good investment books ideal for his age without overwhelming him, can you all suggest some good books which can I recommend?
I would start him off with readings on money management and position sizing before getting into either fundamental or technical analyses. Good traders and investors are math agnostic one just needs to have a clear head. Psychological aspects like emotion regulation matter more than having technical and fundamental knowledge. Ofcourse they are necessary for both trading and investing success but the key to success is more psychological.

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Best way to monitor a company is via Google Alerts. Market crash takes down all stocks - it is just that falls in some stocks are steeper. That does not help you decide which stocks to sell when.
The TAMO stock looks battered. Based on the technical charts, I would not be too surprised if it touches 150/140 in the coming few weeks. Never catch a falling knife is my motto

Last edited by SmartCat : 13th May 2019 at 15:21. Reason: Back to back posts merged
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Old 13th May 2019, 15:16   #368
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Default Re: Guide: Investing in shares of the automotive sector

Whats happening with Motherson Sumi?

The stock doesnt seem to hit rock bottom and is still on a free fall!!
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Old 13th May 2019, 15:35   #369
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Default Re: Guide: Investing in shares of the automotive sector

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Whats happening with Motherson Sumi? The stock doesnt seem to hit rock bottom and is still on a free fall!!
Motherson Sumi has Eicher Motors for company - both are seeing major selling. Unlike Tata Motors, the financials of these two companies are fine. Also, no point in trying to find a reason for fall in price when the overall index is dropping rapidly.

Last edited by SmartCat : 13th May 2019 at 15:49.
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Old 13th May 2019, 16:54   #370
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Originally Posted by SmartCat View Post
Motherson Sumi has Eicher Motors for company - both are seeing major selling. Unlike Tata Motors, the financials of these two companies are fine. Also, no point in trying to find a reason for fall in price when the overall index is dropping rapidly.

Considering the overall financials of the company coupled with the current price, is it a good time to buy either of these stocks in your opinion, SmartCat?
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Old 13th May 2019, 21:10   #371
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Default Re: Guide: Investing in shares of the automotive sector

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Considering the overall financials of the company coupled with the current price, is it a good time to buy either of these stocks in your opinion, SmartCat?
Whether buying into a new stock or averaging down a stock that is already there in your portfolio, I recommend that you have certain "rules" or filters.

Eg: I would recommend buying marquee stocks like Maruti, Eicher, Motherson Sumi at a PE<20. Right now, all the stocks are 15 to 20% above the PE Ratio filter I recommend. So I'd recommend that you wait till stock price falls a bit or for earnings growth to pick up (If EPS grows, PE Ratio falls).
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Old 23rd May 2019, 08:18   #372
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Default Re: Guide: Investing in shares of the automotive sector

Tata is mighty pissed off. This came in at 2200 hours last night:

Quote:
Statement on the media report - "Tata's biggest challenge: $14 billion in auto debt and a slowdown in China”.

There has been a misleading report in the media today “Tata's biggest challenge: $14 billion in auto debt and a slowdown in China”.

In this regard, Tata Group wishes to clarify the following:

The Tata Motors group is a Rs 3,00,000 Cr international automotive conglomerate with a Networth of Rs 60,000 Cr that generates an EBITDA of Rs 27,000Cr. Its automotive business has a net debt of Rs 28,000Cr. Out of this JLR is Rs 6,500Cr (Net Debt / EBITDA of 0.4) and Tata Motors domestic business is 15,500Cr (Net Debt / EBITDA of 2.7).

Additionally, we have Tata Motors Finance, an NBFC that finances commercial and passenger vehicles. This has a net debt of 38000cr to finance commercial and passenger vehicles with Net NPAs of 1.4% generating 12% ROE.

Our business is well capitalised with Consolidated Net Automotive Debt to Equity of 0.47. The maturities of our debt is well spread out right till 2027. Additionally, we have Rs 19,000Cr of undrawn revolving credit facilities. The business generates operating cash flows after interest of Rs 21500Cr.

The figures quoted in the article pertain to gross debt numbers which gives a misleading picture. As reported by all global auto industry firms, this needs to be seen as Net Automotive Debt (Gross debt less cash on hand without considering the financing arm) which, as can be seen from the above analysis, is at comfortable levels.

- Tata Sons Spokesperson
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Old 11th June 2019, 15:21   #373
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Default Re: Guide: Investing in shares of the automotive sector

Hi All, wanted to ask if anyone can share numbers on ROI over the lifecycle of a car project - that includes capex and opex? In general I wanted to ask how fast ( in how many years) does a company starts earning profits (not operational profit) on a car project?
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Old 11th June 2019, 16:07   #374
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Default Re: Guide: Investing in shares of the automotive sector

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Hi All, wanted to ask if anyone can share numbers on ROI over the lifecycle of a car project - that includes capex and opex? In general I wanted to ask how fast ( in how many years) does a company starts earning profits (not operational profit) on a car project?
Car makers don't publish these numbers, and it is easy to understand why. Most models these days have parts carried over from previous generation models (Eg: engines, chassis).

Your best bet to arrive at some numbers is to do some research on Tata Nano because most data points are available.

- How much was invested by Tata Motors to develop the Nano?
- How much was invested by Tata Motors into the Sanand plant?
- Average ex-factory price of Tata Nano

You need to make some assumptions about raw material costs (eg: 80% for small cars like Nano), depreciation rate of fixed assets in Sanand plant, interest on loans taken for the plant, debt to equity ratio of the project etc.

Basically, a car like Nano would have generated decent returns only at full capacity (20,000 per month) because of low price. Returns on a car model is directly proportional to volumes sold.
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Old 11th June 2019, 18:06   #375
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Default Re: Guide: Investing in shares of the automotive sector

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Your best bet to arrive at some numbers is to do some research on Tata Nano because most data points are available.
Thank, you thats a superb suggestion.
Any ball park figures of any Indian car/ bike from inception to market success, what was time taken for the project to recoup all investment costs ?
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