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Old 20th March 2020, 07:54   #436
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Default Re: Guide: Investing in shares of the automotive sector

AL fell sharply yesterday. Is it a good buy now at about 46?

And Maruti at 4600?

And TM at 67?
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Old 20th March 2020, 11:04   #437
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AL has high beta. If the market moves 1 either way, it goes more than 1 In same direction as the market, but more than the market movement. TML will depend on fortunes of JLR.
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Old 20th March 2020, 11:15   #438
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Default Re: Guide: Investing in shares of the automotive sector

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AL fell sharply yesterday. Is it a good buy now at about 46?
Ashok Leyland crashed today because of corporate governance issues. In these tough times, they are buying 20% of a Hinduja group company for Rs. 1,200 cr. Now just any other company - they are buying a NBFC (that probably has lots of NPAs).

Ashok Leyland to acquire upto 19% equity shares in Hinduja Leyland; share hits 52-week low
https://www.moneycontrol.com/news/bu...w-5050441.html
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Old 20th March 2020, 14:30   #439
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Originally Posted by SmartCat View Post
Ashok Leyland crashed today because of corporate governance issues. In these tough times, they are buying 20% of a Hinduja group company for Rs. 1,200 cr. Now just any other company - they are buying a NBFC (that probably has lots of NPAs).
Oops. Hadn't noticed that. I recall a listed company named "Ashok Leyland Finance Ltd.,". What happened to it? Ennore Foundries was another group company.
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Old 20th March 2020, 15:12   #440
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Default Re: Guide: Investing in shares of the automotive sector

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Oops. Hadn't noticed that. I recall a listed company named "Ashok Leyland Finance Ltd.,". What happened to it? Ennore Foundries was another group company.
OK, just looked up Ashok Leyland annual report. (Ashok) Leyland Finance is already a subsidiary of Ashok Leyland. This Rs. 1,200 cr investment will increase shareholding by another 19%. From the above moneycontrol.com article:

Quote:
Ashok Leyland touched a fresh 52-week low of Rs 50.15, falling 22 percent intraday on March 19 after the company approved acquisition of up to 19 percent additional equity shares in Hinduja Leyland Finance from the existing shareholders in tranches.
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Old 6th April 2020, 12:57   #441
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Default Re: Guide: Investing in shares of the automotive sector

My view on the subject is a little divergent from the subject heading. Investing activity should be with a view of capital enhancement and the risk should be balanced out between atleast 5-6 different sectors. Therefore restricting oneself to any thematic technique is unduly risky, specially in the present situation. Automotive stocks and anything intricately linked to the sector are over the top risky at the moment.

Just to add, the automotive scenario will be in doldrums for 3 years atleast, before growth resumes from a baseline, setback by 3 yrs. With huge dependency on China (China likely to be a pariah once the US/EU come out of Corona and start derisking / aveging themselves), JLR will continue to be the albatross around TML's neck. The hit on the economy is likely to depress the CV segment also. Sort of a double whammy for TML and a setback for ALL & MM. Automotive ancillary stocks that have an independent presence in the replacement market (Tyre, batteries, proprietary parts etc) are likely to fare relatively better, but not yield stellar return of yore.

Overall there maybe (a HUGE MAYBE) a silver lining for the domestic industry if the Modi Govt wakes up and doggedly follows strategic independence in critical sectors like healthcare, telecom and electronic components (touches automotive) sectors.

I'd repeat that temptation of low stock price aside, automotive stocks are toxic assets at the moment. if you are willing to wait 5-10 yrs, thats another matter altogether.

Last edited by aditya79india : 6th April 2020 at 12:59. Reason: spellcheck
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Old 6th April 2020, 13:07   #442
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Default Re: Guide: Investing in shares of the automotive sector

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My view on the subject is a little divergent from the subject heading. Investing activity should be with a view of capital enhancement and the risk should be balanced out between atleast 5-6 different sectors. Therefore restricting oneself to any thematic technique is unduly risky, specially in the present situation.
Correct. But the reason for choosing the automobile sector is that everybody here is familiar with MARUTI, but not GAIL. The rules or process to be followed for evaluating stocks is the same across sectors -> PE ratio, return on equity, debt to equity ratio, dividend yield, price to book value, brand value, past growth history, future growth prospects and so on.

It's a bit like -> once you know how to drive a Maruti car, you know how to drive a Hyundai too

Last edited by SmartCat : 6th April 2020 at 13:25.
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Old 10th April 2020, 12:35   #443
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Default Re: Guide: Investing in shares of the automotive sector

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It's a bit like -> once you know how to drive a Maruti car, you know how to drive a Hyundai too
@SmartCat - What is your take on Maruti amidst COVID and following that.

The stock went as low as Rs. 4000 and in the last two days it has improved to Rs. 5300 levels. Though my purchase price was 8000+, I was thinking to sell partial of shares (albeit will be in loss) but will prevent the possibility of it going further below levels like 3000-2000!

What is suggested here?

PS - I don't need cash urgently though.

Last edited by bluevolt : 10th April 2020 at 12:39.
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Old 10th April 2020, 12:49   #444
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Default Re: Guide: Investing in shares of the automotive sector

@Smartcat:
What's your take on Tata and MS? Buy or wait?

Tata is on an all time low these days and so is MSIL. I can easily maintain a horizon of say 18 to 24 months, shall I buy them? If yes, then what shall be my target selling price and the time frame you suggest for holding?
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Old 10th April 2020, 12:53   #445
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The stock went as low as Rs. 4000 and in the last two days it has improved to Rs. 5300 levels. Though my purchase price was 8000+, I was thinking to sell partial of shares (albeit will be in loss) but will prevent the possibility of it going further below levels like 3000-2000!
Let it go to Rs. 1000, why would you care? The current market price of Maruti matters only if you need the money for some other purpose. Let me repeat my favorite real estate example:

- You bought a piece of land for Rs. 10 Lakhs
- Because of lockdown and aftermath, there is no demand for such land 20 kms from city center.
- If you go to a broker now, he will say that he might be able to find a buyer immediately for Rs. 7 Lakhs. If things get worse, that broker will tell you that he might be able to find a buyer immediately for only Rs. 5 Lakhs now.
- But the offer price matters only if you need the cash immediately for some other purpose. You wouldn't care much if the broker quotes Rs. 1 Lakh for that piece of land.

Ditto with stocks. They are assets like just real estate. It's not just some random numbers. If you don't like the offer price (current market price), just say "thanks, but no thanks".

When the economy and consumer spending recovers, so will the price of Maruti stock or that piece of land you bought. Remember that:

- If you book losses on Maruti now and move into cash, that money is "lost" permanently.
- If you sell Maruti and buy HDFC Bank now, it is likely that HDFC Bank will fall too if market sentiment worsens.

Quote:
Originally Posted by VKumar View Post
Tata is on an all time low these days and so is MSIL. I can easily maintain a horizon of say 18 to 24 months, shall I buy them? If yes, then what shall be my target selling price and the time frame you suggest for holding?
Tata Motors is the riskiest bet among all automobile stocks, but has the highest returns probability (if things go well). Check this:
https://www.team-bhp.com/forum/india...ml#post4767271 (Guide: Investing in shares of the automotive sector)

Last edited by SmartCat : 10th April 2020 at 13:07.
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Old 11th April 2020, 02:29   #446
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Default Re: Guide: Investing in shares of the automotive sector

anybody has any insight in the shares of M&M. They were trading at 650 about 8 months back and now are at 280-300. I think M&M being a good company it should be a no brainer to pick up these shares or am i missing something ?

Appreciate any insight.
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Old 11th April 2020, 09:48   #447
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anybody has any insight in the shares of M&M. They were trading at 650 about 8 months back and now are at 280-300. I think M&M being a good company it should be a no brainer to pick up these shares or am i missing something ?
Remember that when you buy M&M stock, you are buying a conglomerate.

Looks like Ssyangyong is pulling down M&M, losing $100 million per quarter. In addition to Ssyangyong, M&M owns many other small to medium sized subsidiaries (two wheelers, North America subsidiary, retail etc) that are losing money. On the bright side, M&M owns Tech Mahindra, M&M Financials, Mahindra Holidays, Mahindra Lifespace (real estate biz), Mahindra Logistics etc and these are all profitable.

The core business of M&M - passenger vehicles, commercial vehicles and tractors - is doing OK. There is a 15 to 20% drop in volumes when compared to last year though.

In terms of share price, it is trading at ultra-cheap 2010 valuations. Price to book value is 1.2 (which is close to liquidation value). However, M&M finance is a risk, thanks to covid crisis. Not sure how bad it will get at Ssangyong.

Last edited by SmartCat : 11th April 2020 at 09:50.
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Old 11th April 2020, 14:51   #448
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by M00M View Post
anybody has any insight in the shares of M&M. They were trading at 650 about 8 months back and now are at 280-300. I think M&M being a good company it should be a no brainer to pick up these shares or am i missing something ?

Appreciate any insight.
Quote:
Originally Posted by SmartCat View Post
Remember that when you buy M&M stock, you are buying a conglomerate.

, M&M owns Tech Mahindra, M&M Financials, Mahindra Holidays, Mahindra Lifespace (real estate biz), Mahindra Logistics etc and these are all profitable.

The core business of M&M - passenger vehicles, commercial vehicles and tractors - is doing OK. There is a 15 to 20% drop in volumes when compared to last year .
The problem is that Mahindra's core is fine but its diversifications and acquisitions are a bit "also ran"

Ssyangyong - is an "also ran" in terms of cars
Tech Mahindra even as Satyam was way being TCS, Infy, Wipro and HCL
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Lifespaces in Chennai did ok with Mahindra City but not much else. Tractors is a "stolid" proposition. They have a strong network but have not really improved on the technology. Automotive did well but screwed up on the smaller SUV's
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Old 11th April 2020, 15:28   #449
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Default Re: Guide: Investing in shares of the automotive sector

But isn't that the general condition of the market anyways? Maruti from 9000 levels to 4000-5000ish etc?

Percentage-wise I see no major fall with M&M as compared to the rest of the market (unlike TATA Motors that is down from 500 levels to 60-70ish, for example).

Last edited by CrAzY dRiVeR : 11th April 2020 at 15:30.
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Old 11th April 2020, 15:37   #450
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Originally Posted by CrAzY dRiVeR View Post
But isn't that the general condition of the market anyways? Maruti from 9000 levels to 4000-5000ish etc?

Percentage-wise I see no major fall with M&M as compared to the rest of the market (unlike TATA Motors that is down from 500 levels to 60-70ish, for example).
M&M is a conglomerate. It has some 140 odd companies under its umbrella. It would be a nightmare to really track all of them, figure out actual P&L numbers and to really do any analysis. Furthermore, it would be very difficult to truly assess their capital allocation. In simple words, it is like a holding company and holding companies usually trade at a discount, often 50-60% or even more to their fair value.
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