Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 11th June 2019, 18:20   #376
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by rrsteer View Post
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 ?
I distinctly remember reading somewhere that M&M spent about Rs. 600 crores to develop the 1st gen Scorpio (launch year 2003). This includes engine development costs (outsourced to AVL, Austria). Now find out how many 1st gen scorpios they sold! It is reasonable to expect gross margins of 30% of relatively expensive model like Scorpio. That is, raw material costs would be approx 70%

Not sure if M&M invested in a new factory for Scorpio or they used existing ones. Not sure about costs of dies, paint booth, assembly line etc either. Perhaps FY02 or FY03 M&M Annual Report has this data.

Last edited by SmartCat : 11th June 2019 at 18:56.
SmartCat is online now   (4) Thanks Reply With Quote
Old 8th July 2019, 18:12   #377
Senior - BHPian
 
bluevolt's Avatar
 
Join Date: Jan 2011
Location: New Delhi
Posts: 3,057
Thanked: 2,457 Times
Default Re: Guide: Investing in shares of the automotive sector

Maruti stock now below 6000! Is Maruti stock going to be another Tata motors stock?

Any views on the long term future of the stock?
bluevolt is offline   Reply With Quote
Old 8th July 2019, 19:08   #378
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by bluevolt View Post
Maruti stock now below 6000! Is Maruti stock going to be another Tata motors stock? Any views on the long term future of the stock?
As long as news flow about production cuts, automotive dealership closures and NBFC issues keeps hitting Economic Times front page, all automotive stocks will keep trending downwards. But Maruti is very different from Tata Motors because they are market leaders and their balance sheet is strong (no debt). Personally, I would prefer buying largecaps at price to earning ratio < 20 (right now, Maruti is still trading at 25 PE).
SmartCat is online now   (3) Thanks Reply With Quote
Old 8th July 2019, 19:48   #379
BHPian
 
Join Date: Jul 2014
Location: Montreal, CA
Posts: 217
Thanked: 80 Times
Default Re: Guide: Investing in shares of the automotive sector

Planning to invest some money in stocks, anything good that I could be looking at as of right now? I'm thinking of few years as of right now.
sweetvar26 is online now   Reply With Quote
Old 15th July 2019, 22:11   #380
BHPian
 
Join Date: Aug 2008
Location: Delhi
Posts: 112
Thanked: 38 Times
Default Re: Guide: Investing in shares of the automotive sector

Hi smartcat! What’s your current opinion on Kpit and Izmo? Izmo had bagged a defence deal with the govt to make guns.

Thinking of investing a tiny amount for 5yrs.
sinhead is offline   Reply With Quote
Old 15th July 2019, 23:21   #381
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by sinhead View Post
Hi smartcat! What’s your current opinion on Kpit and Izmo? Izmo had bagged a defence deal with the govt to make guns.
I used to own KPIT Tech, but exited it a couple of years back. Their merger/demerger shenanigans (with Birlasoft) makes my head spin. Wait to see how their perform individually before you invest in them.

To begin with, avoid microcaps like Izmo (Rs. 50 cr marketcap). Although it is reporting profits every year, they have not paid a single paisa as dividend. It is impossible to find out if the company is reporting real profits or imaginary profits
SmartCat is online now   (5) Thanks Reply With Quote
Old 16th July 2019, 17:15   #382
Senior - BHPian
 
bluevolt's Avatar
 
Join Date: Jan 2011
Location: New Delhi
Posts: 3,057
Thanked: 2,457 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by SmartCat View Post
THE EASIER WAY

You are in Manali and want to get to Leh. You can either drive a car yourself or take the bus! The equivalent of taking a bus is to invest in the UTI Transportation & Logistics Fund. This mutual fund invests only in automobile stocks and auto component makers.
Smartcat, In the current scenario where we are witnessing a slowdown in automobiles, what are your thoughts about UTI Transporation and Logistics fund?

Should I continue my SIPs in this fund or think about alternatives?
bluevolt is offline   (1) Thanks Reply With Quote
Old 16th July 2019, 19:09   #383
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by bluevolt View Post
Smartcat, In the current scenario where we are witnessing a slowdown in automobiles, what are your thoughts about UTI Transporation and Logistics fund? Should I continue my SIPs in this fund or think about alternatives?
SIP works best during cyclical downturns, and does not work too well when stocks are going up. But how much do you have in this particular fund in percentage terms, when compared to your overall mutual fund portfolio? Stop your SIP if this percentage is too high.

Personally, I have 15% exposure to automobile sector in my equity portfolio. This includes -

- Passenger cars
- Two wheelers
- Commercial vehicles
- Tyre makers
- Battery makers
- Lubricants
- Auto component makers
- Fuel retailers
SmartCat is online now   (3) Thanks Reply With Quote
Old 16th July 2019, 19:16   #384
Senior - BHPian
 
bluevolt's Avatar
 
Join Date: Jan 2011
Location: New Delhi
Posts: 3,057
Thanked: 2,457 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by SmartCat View Post
SIP works best during cyclical downturns, and does not work too well when stocks are going up. But how much do you have in this particular fund in percentage terms, when compared to your overall mutual fund portfolio? Stop your SIP if this percentage is too high.

Personally, I have 15% exposure to automobile sector in my equity portfolio. This includes -

- Passenger cars
- Two wheelers
- Commercial vehicles
- Tyre makers
- Battery makers
- Lubricants
- Auto component makers
- Fuel retailers
For this particular fund, my allocation is 10% per month out of my overall mutual fund portfolio.
bluevolt is offline   (2) Thanks Reply With Quote
Old 24th July 2019, 09:41   #385
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Rumour (as heard on CNBC TV18): HDFC Bank, one of the largest dealer financing banks, has stopped inventory funding for automobile dealerships. This could reduce inventory offtake by dealerships, thereby affecting all automobile companies.

Related thread:
https://www.team-bhp.com/forum/india...jobs-lost.html (Slowdown bites hard: 205 dealers shut down, Rs 2000 crore losses & 3000 jobs lost)
SmartCat is online now   (3) Thanks Reply With Quote
Old 29th July 2019, 10:41   #386
Senior - BHPian
 
bluevolt's Avatar
 
Join Date: Jan 2011
Location: New Delhi
Posts: 3,057
Thanked: 2,457 Times
Default Re: Guide: Investing in shares of the automotive sector

More trouble for Maruti (and shareholders) in future -


Maruti volumes likely to see 2-5% decline in FY20

When I bought Maruti stock, everything was rosy for the company, be it the new models rolling in, good margins, long waiting period and was anticipating 10k mark.
With the current scenario, feels stuck to have bought automobile company shares!
bluevolt is offline   (1) Thanks Reply With Quote
Old 1st September 2019, 20:04   #387
BHPian
 
arvindmanju's Avatar
 
Join Date: Jul 2009
Location: KA01
Posts: 325
Thanked: 235 Times
Default Re: Guide: Investing in shares of the automotive sector

I think all the car sales numbers have come crashing.

Quote:
Maruti Suzuki reported a 32.7% decline in sales at 1,06,413 units in August as against 1,58,189 units in corresponding month last year
Maruti Suzuki domestic sales declined by 34.3% at 97,061 units last month as against 1,47,700 units in August 2018
Source
livemint

Quote:
Eicher-Volvo Sales Decline 41.7% In August
Tata Motors' Car Sales dip 58% In August
Mahindra & Mahindra Sales Fall 25%
Quote:
Sales of cars and two-wheelers showed no signs of revival in August as heavy rains and liquidity constraint kept buyers away ahead of the festival season, according to a BloombergQuint survey of 10 large dealerships across India.
source

Is it good time to buy good auto companies like M&M
Maruti, Motherson, whose fundamentals are still intact.

Last edited by arvindmanju : 1st September 2019 at 20:13.
arvindmanju is offline   Reply With Quote
Old 2nd September 2019, 08:29   #388
Distinguished - BHPian
 
Hayek's Avatar
 
Join Date: Jul 2011
Location: Bombay
Posts: 971
Thanked: 3,492 Times
Default Re: Guide: Investing in shares of the automotive sector

Sorry to butt in to this thread, but I think the entire idea that retail investors (most Team BHPians) know enough to time sector allocation is a flawed one. Please remember that market prices reflect the impact of trading by hundreds of professional investors who invest millions of dollars and millions of man hours into research on stocks - trying to find the smallest advantage. Despite that, they find it hard to predict what is going to happen next to a particular sector - and the average long only fund underperforms index funds. Assuming that just because you like cars, you know how auto stocks will perform is foolhardy. So the bulk of your portfolio should be in a portfolio of funds - with a mix of index funds, long only funds and bonds - with SIPs used to invest, and periodic (once a year) portfolio rebalancing to get back to your desired asset allocation. If you have enough money and want to indulge in a “investing” hobby, do that with a small part of your portfolio. But recognise that this is just gambling, given your lack of ability to compete with the pros, and keep that separate from your investments aimed at making money for the future.

Last edited by Hayek : 2nd September 2019 at 08:31.
Hayek is offline   (6) Thanks Reply With Quote
Old 2nd September 2019, 09:15   #389
Team-BHP Support
 
SmartCat's Avatar
 
Join Date: Jun 2007
Location: Bangalore
Posts: 4,282
Thanked: 21,188 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by Hayek View Post
Sorry to butt in to this thread, but I think the entire idea that retail investors (most Team BHPians) know enough to time sector allocation is a flawed one. Despite that, they find it hard to predict what is going to happen next to a particular sector. Assuming that just because you like cars, you know how auto stocks will perform is foolhardy.
If you read up my posts (see first page of this thread), you will notice that it is NOT about predicting the future. It is about valuing a stock and whether it makes sense to buy a stock at a particular valuation. Quoting myself from post in page 1:

Quote:
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
Guess what? The price of PPAP Automotive now is Rs.174 - around the price that I said is its fair value when I made the post

The core objective of this thread is to get people interested in equities. That will happen only when you associate investing with their passion (cars). If you talk about index and bonds, good luck - nobody will take a second look

Quote:
So the bulk of your portfolio should be in a portfolio of funds - with a mix of index funds, long only funds and bonds - with SIPs used to invest, and periodic (once a year) portfolio rebalancing to get back to your desired asset allocation.
I have covered asset allocation strategies in the Stock Market and Mutual Fund threads.
https://www.team-bhp.com/forum/shift...ck-market.html (Do you play the stock market)
https://www.team-bhp.com/forum/shift...ds-thread.html (The Mutual Funds Thread)

Last edited by SmartCat : 2nd September 2019 at 09:16.
SmartCat is online now   (13) Thanks Reply With Quote
Old 2nd September 2019, 20:01   #390
Senior - BHPian
 
Join Date: Dec 2006
Location: NH209
Posts: 1,674
Thanked: 837 Times
Default Re: Guide: Investing in shares of the automotive sector

Quote:
Originally Posted by arvindmanju View Post
..as heavy rains and liquidity constraint kept buyers away..
June and july, monsoon delayed/failed, so cars didn't sell.

Now august got heavy downpour, so cars didn't get sell.

Existentialism, illustrated.
ramzsys is offline   (1) Thanks Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Investing in Gold ETF or physical Gold - Which is better amitk26 Shifting gears 38 19th May 2017 11:48
BMW shares drop on report that X3 diesel's emissions exceeded EU limit TheDoctor The International Automotive Scene 5 26th September 2015 16:44
Ceat Tyres investing Rs. 400 crore in new plant at Nagpur Aditya Tyre & Alloy wheel Section 1 11th December 2014 18:55
2014 Honda CBR 250R shares design with the recently unveiled CBR 300R JayPrashanth Motorbikes 6 25th October 2013 17:21
2011 BS4 Nano shares my garage kingofmyworld Test-Drives & Initial Ownership Reports 18 13th August 2011 03:24


All times are GMT +5.5. The time now is 00:09.

Copyright ©2000 - 2019, Team-BHP.com
Proudly powered by E2E Networks