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Originally Posted by Nonstop-driver While on the subject, @smartcat, others, what are the available Mutual Funds that invest 100% in auto/ ancillary sector in India? |
Not that I know of. There is something else you could do - invest in BSE Auto (like BSE Sensex) index, which has historically given 10x returns in 12 years.
Well, you can't exactly 'buy' the BSE Auto index through your broker. Instead, you could buy stocks that constitute the BSE Auto index. That is, invest equal amounts (say Rs. 100,000) in each of these stocks.
Ashok Leyland
Bajaj Auto
Bharat Forge
Bosch
Cummins
Eicher Motors
Exide Ind
Hero Motorcorp
M&M
Maruti Suzuki
Motherson Sumi
MRF
Tata Motors
Your portfolio will more or less (but not exactly) replicate the performance of BSE Auto Index.
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Originally Posted by Varun_HexaGuy Though I'm too young(only 15)to do some investments but thanks for this helpful thread. Now coming to the point, if I were to ever to make any investments in the share market of the Automotive Sector, then I would put all my money on the 'PPAP Automotive' because of the following reasons : Since their list of Pro's easily outweigh their Con's, I would prefer to put my money on 'PPAP Automotive' over any other car manufacturer. |
Putting all your money on one stock is a bad idea. Anyway, although you still have 7 or 8 years before you start earning, you can still dabble in stocks - with
imaginary money.
1) Go to
www.moneycontrol.com and sign up for free portfolio account.
2) Identify one stock to "invest" (imaginary Rs. 10,000 money) in every month. Let's say you like PPAP Automotive (price: Rs. 400 per share). Add this stock to your portfolio with quantity of shares purchased as 25 (400 x 25 = 10,000)
3) Next month, add one more stock to the portfolio based on your research. Check out the website, read investor presentations, annual reports and brokerage reports before you "invest" your imaginary money. Do this for the next 12 months.
4) Keep tracking the quarterly results of the companies you "own". And watch your imaginary money grow.
You will learn a lot about investing this way.
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Originally Posted by anubshar Wanted to know your take on Force motors, the share is pricing at a fair value currently and I have heard it has a potential to be an Eicher motor. |
FORCE MOTORS PROS:
1) 33% of Force Motors' revenues comes from BMW & Mercedes. It is likely to climb up to 50% in the next 2 years, and probably beyond. So Force Motors is a good proxy for growth (estimated to be 20% per annum) in luxury car segment
2) Started off by assembling Mercedes diesel engines, but now their portfolio includes - assembly of diesel engines of different capacities, petrol engines, gearbox and also assembly of front axle & rear axle. Since the association with Mercedes is long, it is quite likely that Mercedes will send more business to Force Motors in the future.
3) Tempo Traveller has 70% market share in inter-city family tourer segment. Market share is likely to sustain because of it is based on monocoque chassis (lighter and hence more fuel efficient). Also has Tractor & Tempo Trax business. They occasionally sell a couple of Force Gurkha 4x4 to Team-BHP offroad enthusiasts every year.
4) No debt, rising return on equity.
5) Profits likely to grow by 20% to 25% per annum over the next few years.
FORCE MOTORS CONS:
1) Way too expensive for such a small company. Valued at 30 times profits.
2) Low dividend payout ratio of 5% to 7%. Offers a dividend yield of only 0.24%
3) Past financial history is quite bad.
If anybody has difficulty imagining what "30 times earnings" or "30 times profit" means, here is an hypothetical example -- Let's say there is a company that earns around Rs. 10 Lakhs per year profit currently.
- You have bought this company at 30 times earnings meaning you paid Rs. 3 Cr.
- Let's say the company is unable to grow but continues to generate a profit of Rs. 10 Lakhs per year.
In the above scenario, it will take 30 years (10L x 30) to recover back the money you invested in the company.
So when you buy small companies like Force Motors at 30 times earnings, you need to be reasonably sure that they won't mess up. Management needs to deliver long term growth in profits or the stock will come crashing down to earth.