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Old 23rd September 2017, 00:35   #121
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by Ragavsr View Post
My only question for you - is Indag Rubber a stock worth investing right now ? 24% CAGR is phenomenal. This stock looks to have phenomenal growth from 2010-2015 and has been flat ever since.
Too expensive for such a tiny company. I usually avoid paying more than 15 times earnings for a company that is able to generate only Rs. 20 cr to Rs. 30 cr profits. At current prices, there is very little margin of safety.

Perhaps you could consider buying 30% to 40% of what you normally would, and add more over time. After the initial purchase, you either wait for earnings to grow or for stock price to fall before adding more shares.


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Originally Posted by Viju View Post
Back with another request - this time for Bridgestone Corp (TYO:5108). Trying to stick to your advice on investing in companies with strong fundamentals, I have been searching for automotive stocks (it's my field of work, and the only one I understand) which are worth investing in.
You are right - tyre companies are agnostic to changes in the automotive world (EVs /ride sharing /autonomous cars). Lots of positives for Bridgestone:

1) Number 1 tyre maker in the world
2) Good financials & decent valuations
3) OKish dividend yield. But as you pointed out, dividends are rising despite slightly lumpy earnings. This implies management is confident about future prospects.
4) Estimated earnings growth of 3% pa.

You can buy in right away, but add more on declines if you want extra returns.

Last edited by tsk1979 : 23rd September 2017 at 04:09.
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Old 6th October 2017, 14:56   #122
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Default Re: Guide: Investing in shares of the automotive sector

Excellent thread Smartcat! Highly informative for newbies like us.

I have one query from my side. Forgive me if I missed reading this in one of your posts.

We often hear about the word Stop Loss. i.e. to sell our stock when the price reaches a particular low.

Now how to analyse and compute this stop loss price. Does it only depend on the risk appetite of the investor or is there a technical analysis for the same.

I suppose for good companies only short term investors are wary of the Stop Loss price? As long term investors are confident about its fundamentals.
Please correct me if I am wrong.

But what about small and medium cap companies specially for short term investors who want to book profits and go.

Thanks.
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Old 6th October 2017, 16:52   #123
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Default Re: Guide: Investing in shares of the automotive sector

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We often hear about the word Stop Loss. i.e. to sell our stock when the price reaches a particular low. Now how to analyse and compute this stop loss price. Does it only depend on the risk appetite of the investor or is there a technical analysis for the same.
STOP LOSS is only used by traders, and not investors. Generally, stop loss price is fixed at half the expected gains. That is, if the goal of your trade is to earn Rs. 100, you risk Rs. 50 on the trade. This way, you will make profits even if odds of your trades are only 50:50.

Investors usually don't have 'stop loss' based on price action, but they cut their losses when fundamentals of the company deteriorate. Read this post:
http://www.team-bhp.com/forum/indian...ml#post4219950
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Old 11th October 2017, 14:29   #124
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Default Re: Guide: Investing in shares of the automotive sector

Hello smartcat

Although you had done a detailed analysis of the Maruti Suzuki stock in the beginning of this thread, I would like to hear your valuable opinions on Suzuki Motor Corporation (TYO:7269).

Compared to other Japanese automotive OEM stocks, the only sore point for me is the very low dividend yield. Thanks in advance.
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Old 11th October 2017, 17:55   #125
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Default Re: Guide: Investing in shares of the automotive sector

Those wanting some exposure to EV space should consider investment in JSW Energy stock. However, I don't like to or recommend investment in companies based on a future theme.

JSW likely to partner China's Geely for electric vehicle foray
http://www.business-standard.com/art...1000323_1.html

Quote:
Originally Posted by Viju View Post
Although you had done a detailed analysis of the Maruti Suzuki stock in the beginning of this thread, I would like to hear your valuable opinions on Suzuki Motor Corporation (TYO:7269). Compared to other Japanese automotive OEM stocks, the only sore point for me is the very low dividend yield. Thanks in advance.
Looks like Suzuki Motor Corp stock offers more value than Maruti Suzuki stock, since it is trading at PE of 14. Dividend yield is low (0.75%) because Suzuki is a bit stingy - they are paying out only 10% of their profits as dividends. India constitutes majority of revenues of Suzuki Corp and they own majority stake in Maruti Suzuki.

Their exposure to Japan, Europe & South Asian countries can be seen as both negative and positive. Overall growth in percentage terms will be less than Maruti Suzuki, but it provides geographical diversification. By the way, Suzuki Europe grew at double digits which means they are gaining market share.

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Originally Posted by VKumar View Post
I also have a question: I am mentally prepared to jump into the MSIL bandwagon but awaiting them to declare that they have their 1.5l engine ready. Can this be a decent investing opportunity? All I am looking at is better ratios since there will be no more royalty payments to Fiat.
I'm not sure if Fiat payments are a good reason to buy or wait. It is unlikely to affect the bottom line much. See, if Maruti is avoiding payments to Fiat, they will still have pony up cash as royalty payments to Suzuki Japan.

Maruti remains an expensive stock. For such stocks (as mentioned before), have half of your fill right now - that is, buy for Rs. 50,000 if you usually invest Rs. 1 Lakh in a stock. Buy more if Maruti stock falls, in small increments of Rs. 10,000 each for every 5% fall. You can use your discretion on the percentage or amount when you are averaging down.

Last edited by SmartCat : 11th October 2017 at 18:06.
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Old 11th October 2017, 17:55   #126
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Default Re: Guide: Investing in shares of the automotive sector

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Hello smartcat

Although you had done a detailed analysis of the Maruti Suzuki stock in the beginning of this thread, I would like to hear your valuable opinions on Suzuki Motor Corporation (TYO:7269).
@Smartcat

I also have a question:
I am mentally prepared to jump into the MSIL bandwagon but awaiting them to declare that they have their 1.5l engine ready. Can this be a decent investing opportunity? All I am looking at is better ratios since there will be no more royalty payments to Fiat.
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Old 20th October 2017, 00:37   #127
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Default Re: Guide: Investing in shares of the automotive sector

Any recommendations on Goodyear India?

Recently Goldman and Sachs bought 2.4 lakh shares at the price of Rs.907:
http://www.moneycontrol.com/news/bus...ia-2349539.cms


I did some reading:
Company history:
http://www.moneycontrol.com/company-...tory/GI11#GI11

Recent annual reports:
https://www.goodyear.co.in/wp-conten...16-17_Full.pdf
https://www.goodyear.co.in/wp-conten...15-16-FULL.pdf

Seems like a steady company and the stock is not a "trader's" favorite. Daily volumes are low and listed only on BSE. 2 plants in India - Ballabgadh seems to be owned by Goodyear India and makes offroad and farm equipment tyres. Aurangabad is owned by Goodyear Asia pacific private Limited and makes vehicle tyres which Goodyear India markets.

Regarding offroad tyres, I see Balkrishna Industries is a big brand and market's favorite stock. Apollo, JK, Ceat all make offroad tyres. I did not know Goodyear is also focussed on offroad tyres until I read about the company recently. Interestingly, unlike Apollo, JK, Ceat, Goodyear India website does not even mention the offroad product range! Strange!

As a consumer I have had 2 exposures so far:
GPS 2's: came as OEM on my 2004 Honda city. Crap tyres with no grip at all. Pathetic braking and noisy.
NCT 5's: came as OEM on my 2010 Laura TSi. Decent tyres. This is a fast car and there were no issues with grip or braking performance. Replaced at 42000km mark.

I bought a few shares this week at @815.

Last edited by anandpadhye : 20th October 2017 at 00:38.
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Old 20th October 2017, 12:01   #128
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Default Re: Guide: Investing in shares of the automotive sector

what abt SML Isuzu ?
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Old 20th October 2017, 15:37   #129
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Default Re: Guide: Investing in shares of the automotive sector

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what abt SML Isuzu ?
There was a buy recommendation recently in economic times. A strong brand in school bus market the report said...
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Old 21st October 2017, 09:02   #130
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by anandpadhye View Post
Any recommendations on Goodyear India?
.
Tyres are cyclical as the automobile industry itself is cyclical.
Cyclicals are wonderful investments if made at the right time ie. at the bottom of the cycle or thereabouts. But if you were to be unlucky to enter when the cycle is at or around the peak then you could be stuck in a dead investment for years or might have to take heavy losses.
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Old 21st October 2017, 09:37   #131
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by anandpadhye View Post
Any recommendations on Goodyear India?
Quote:
Originally Posted by joslicx View Post
Tyres are cyclical as the automobile industry itself is cyclical. Cyclicals are wonderful investments if made at the right time ie. at the bottom of the cycle or thereabouts. But if you were to be unlucky to enter when the cycle is at or around the peak then you could be stuck in a dead investment for years or might have to take heavy losses.
High quality tyre companies like Goodyear/MRF etc do not behave like cyclical stocks because they manage rubber prices better, possibly via hedging or inventory management. Just look at Goodyear's 10 or 12 year financial performance.

Goodyear stock is reasonably valued and once can expect around 20% per annum over a long term.

What I don't like about Goodyear is the passenger vehicle tyre manufacturing is done by an associate company, and the listed company only 'trades' in them. Also, passenger vehicle tyres contribute only 25% to the revenues (rest coming from agri or construction vehicles)

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Originally Posted by LonelyPlanet View Post
what abt SML Isuzu ?
Yes, their school bus business is continuously growing at 15% per annum, and contributes 50% to their revenues. FY18's financials will be messed up because of BSIII inventory issues but should improve over the next few years.
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Old 25th October 2017, 22:38   #132
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Default Re: Guide: Investing in shares of the automotive sector

Hey @smartcat, any insights into Sona Koyo Steering? Have been following their updates on Screener but not able to make my mind up on this.

P.S. I'm still very green when it comes to stock markets, hence the question.
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Old 25th October 2017, 22:48   #133
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Default Re: Guide: Investing in shares of the automotive sector

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Hey @smartcat, any insights into Sona Koyo Steering? Have been following their updates on Screener but not able to make my mind up on this.

P.S. I'm still very green when it comes to stock markets, hence the question.
I think sona koyo has already been discussed earlier.
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Old 25th October 2017, 23:05   #134
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Default Re: Guide: Investing in shares of the automotive sector

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I think sona koyo has already been discussed earlier.
Yes I read that. But I am thinking of buying the shares. Apparently there's some change since June when Sona Koyo was originally discussed. I couldn't specifically understand some of these changes in the past 3 months, hence the question.
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Old 26th October 2017, 00:36   #135
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Default Re: Guide: Investing in shares of the automotive sector

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Originally Posted by hothatchaway View Post
which are the companies who stand to gain from Bharatmala projects (and hence an upside on their stock prices can be expected) Cement, port and engineering consultancies come to mind, not sure about specific companies
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Originally Posted by rama75 View Post
Now that the Bharat mala road project has been announced, any suggestions on the companies that will benefit from this over the next few years?
If you believe a politician's word, companies in the following sectors will see "100% growth"

- Construction EPC companies
- Cement companies
- Construction equipment companies

https://economictimes.indiatimes.com...w/61230332.cms

Identifying a current or future growth theme first, and picking stocks from those sectors is called "Top-down Investing". And this is something I do NOT indulge in. I'm a 'bottom-up investor' who looks at inexpensive stocks first, without giving too much attention to the sector.

However, from valuations and business prospects point of view, IRB INFRASTRUCTURE seems to be a good Bharat Mala bet. IRB Infra is the operator of Mumbai Pune & Ahmedabad Vadodra Expressway.

- PE of 10 and PBV of 1.5
- Dividend payout ratio of 25% and dividend yield of 2.21%
- Return on equity: 14%
- 15 to 20% sales and profit growth over the past 3 to 10 years. Very stable earnings profile.
- 35% revenue from toll projects & 65% revenue from construction projects

Debt is on the higher side, but then that is expected of annuity projects. Also, the promoters are a bit dicey - with links to politicians etc.
http://www.businesstoday.in/opinion/...ry/189403.html

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Originally Posted by sleepyhead148 View Post
Yes I read that. But I am thinking of buying the shares. Apparently there's some change since June when Sona Koyo was originally discussed. I couldn't specifically understand some of these changes in the past 3 months, hence the question.
Oh? What changes in the past 3 months? There is nothing in the news.
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