By

:
Chitra
Darshini
Deepak
Faizal

The automobile industry in India is
the ninth largest in the world with an
annual production of over 2.3 million
units in 2008.[1] In 2009, India emerged
as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea
and Thailand.[2]

India ranks 1st in the global two-wheeler
market
 India is the 4th biggest commercial vehicle
market in the world
 India ranks 11th in the international
passenger car market
 India ranks 5th pertaining to the number of
bus and truck sold in the world
 India is the second largest tractor
manufacturer in the world.

 Fundamental

Analysis
 Technical Analysis

There is an intrinsic value of security.
Which depends upon underlying economic
(fundamental) factors.
This intrinsic value can be determined
by analyzing fundamental factors relating
to Company, Industry and Economic.
3 steps of Fundamental Analysis
 Economy Analysis
 Industry Analysis
 Company Analysis

 Economic

analysis is the analysis of
forces operating the overall economy a
country. Economic analysis is a process
whereby strengths and weaknesses of
an economy are analyzed. Economic
analysis is important in order to
understand exact condition of an
economy.

India is 16th in the world in terms
of nominal factory output
 The per capita Income is near
about Rs38,000
 more than 10 million people
employed in this industry
 The market value of Automobile
Industry is more than US$8 bl.
and Contribution in Indian GDP is
near about 5%

India ranks second worldwide in farm
output. Agriculture and allied sectors like
forestry and logging accounted for 16.6%
of the GDP, employed 60% of the total
workforce.
 Agro based economy
 Direct impact on industry
 Uncertainty of monsoon



In December 2008, overall
production fell by 22 %.
Passenger Vehicles segment
registered negative growth.
Total number of vehicles sold
including passenger vehicles,
commercial vehicles, twowheelers and three-wheelers
in 2008-09 was 9.72 million as
compared to 9.65 million in
2007-08.

The increase in the price
of fuel and the steel due
to inflation has led to a
slower growth rate of the
car industry in India.
 The effect of inflation has
taken the rise in the price
rate of the cars by 3-4%
 a fall of 8-9% in terms of
turnover.

 Negative

correlation
 Lower interest rates

In India FDI up to 100 percent, has been permitted
under automatic route to this sector
 which has led to a turnover of USD 12 billion in the
Indian auto industry and USD 3 billion in the auto
parts industry.
 manufacturing costs in India are 25 to 30 per cent
lower than their western counterparts
 FDI inflows in Automobile Industry 2008-09 was
Rs.5,212 Cr an increase of 47.25% compare to 200708, while in April-May 2009 it was around Rs.497 Cr.

The Auto sector had a few pre-budget demands
as they were going through a rough patch. The
demands were:
• Adoption of a uniform excise structure for all
passenger and utility vehicles
• Reduction of excise duty on two and three
wheelers
• Provision of benefits for hybrid technology
• Offer liberal credit to the agricultural sector
to enable purchase of tractors

 The

budget proposals for the Auto sector were:
• Excise duty on small cars reduced to 14
percent
• Excise cut on two and three wheelers to 12
percent
• Excise duty on buses and chassis cut from 16
percent to 12 percent
• Excise duty on hybrid cars cut from 24
percent to 14percent
• Custom duty on steel removed

Possible Impact –
• Reduction in excise duty of petrol driven trucks and its
chassis is a positive sign for the commercial vehicle
industry as it would the cost of the petrol driven trucks
and thereby improving the sales.
• Retention of excise duty for two wheelers and small
cars may enable more sales.
• As service tax is imposed on rail and waterways
freight charges, there is a possibility of increase
transport of goods carried by roadways.
• Finally, the cut in the excise and customs duties would
create good improvement for the automobile sector.

 Society

of Indian Automobile Manufacturers
(SIAM), automobile sales (including passenger
vehicles, commercial vehicles, two-wheelers
and three-wheelers) in the overseas markets
increased to 1.53 million units in 2008-09 from
1.23 million units in 2007-08. Export of
passenger vehicles increased from 218,401 in
2007-08 to 335,739 units in 2008-09.

The current trends of the global
automobile industry reveal that in the
developed
countries
the automobile
industries are stagnating as a result of
drooping markets, whereas the automobile
industry in the developing nations, have
been
consistently
registering
higher
growth rates every passing year for their
domestic flourishing domestic automobile
markets

The automobile industry comprises of
 4-wheelers
 2-wheelers
 Auto cmponents(auto parts)
 Auto finance



Five Forces Model
Industrial Life
Cycle
SWOT Analysis
Industry Specific
Index

 Degree

of Rivalry
 Despite the high concentration ratio
seen in the automotive sector, rivalry
in the Indian auto sector is intense due
to the entry of foreign companies in the
market.
The
industry
rivalry
is
extremely high with any being product
being matched in a few months by the
competitors

 Threat

of Substitutes
 The
threat of substitutes to the
automotive industry is fairly mild.
Numerous other forms of transportation
are available, but none offer the utility,
convenience, independence and value
offered by automobiles

 Barriers

to entry
 The
barriers to enter automotive
industry are substantial. For a new
company, the startup capital required
to establish manufacturing capacity to
achieve minimum efficient scale is
prohibitive


Supplier’s power

In the relationship between the industry and its suppliers, the
power axis is tipped in industry’s favor. The industry is
comprised of powerful buyers who are generally able to
dictate their terms to the suppliers.
 
Buyers’  Power
In the relationship between the automotive industry and its
ultimate consumers, the power axis is tipped in the
consumers’ favor. This is due to the fairly standardized
nature and the low switching costs associated with selecting
from
among
competing
brands. 
 




The industrial life cycle is a term used for classifying
industry vitality over time. Industry life cycle
classification generally groups industries into one of four
stages:
Pioneering
Growth
Maturity
Decline

In the growth phase, the product market
has been established and there is at least
some historical guide to ground demand
estimates. The industry is growing rapidly,
often at an accelerating rate of sales and
earnings growth

A scan of the internal and external
environment is an important part of the
strategic planning process. Environmental
factors internal to the firm usually can be
classified as strengths (S) or weaknesses (W),
and those external to the firm can be classified
as opportunities (O) or threats (T). Such an
analysis of the strategic environment is
referred to as a SWOT analysis. SWOT analysis
of the Indian automobile sector gives the
following points:

Industry specific index also called as
sectoral index are those indices, which
represent a specific industry sector. All
stocks in a sectoral index belong to
that sector only. Hence an index like
the BSE auto index is made of auto
stocks. Sectoral Indices are very useful
in
tracking
the
movement
and
performance of particular sector

EPS measures the profit available to the
equity shareholders per share, that is, the
amount that they can get on every share
held.

 
 EPS

= Net income- Dividends on
Preferredstock
Average Outstanding
shares

 The

trend shows that Tata’s net profit margin is quite
stable until it falls to 3.77 in 2009. While the net profit of
India’s no.1 car manufacturer Maruti Suzuki shows a
negative trend from 2007 onwards. But the future prospect
for both the company’s profit is higher. Profit margins
come down as recession hits economy badly hence sales
get reduced and cost get increased very much.

 
 Net

profit Ratio = (Net profit) × 100
(Net sales)

 

Both giants of Automobile industry shows positive
trend in Sales Revenue over the past 5year.
However recession brought hurdles but both
companies have potential to grow in future as lots
of products are still to add in their portfolio.
Moreover increased demand in foreign market
also seems to be a positive signal for better
future.

 
 
The quick ratio is a very stringent measure of
solvency. A general rule of thumb suggests
that the quick ratio should be around 1.
 
 

A high debt to equity ratio suggests that a
company has financed its growth mostly via
debt.

 Debt-Equity

 

Ratio= Total Debt
Total Equity

 The

current ratio is a convenient and
reliable tool for measuring a company's level
of liquidity. The ratio acts as an indication
that the firm is able to generate funds to
make all needed payments in the future;
thus, the ratio indicates whether the firm is
likely to be a going concern.

 

 Tata

motors and Maruti Suzuki both the companies showed a
positive trend in paying dividends till 2008, but the scenario
changed in 2009 as both the company’s dividend per share
fell. According to graph TATA’s dividend was much higher
than that of Maruti, it always provided dividend of above 10
per share to its shareholders while maruti stick to below 5
per share, even though the fall in dividend in 2009, still both
the companies are earning good profit.
Dividend Per Share= Total amount of
Dividend
ShareOutstanding

 

Balance Sheets

 Share

Holding Pattern for Quarter
Ended 30-June-09














Mr. Ratan Tata
Mr. N.A. Soonawala
Mr. R. Gopalakrishnan
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
 
 

S.M. Palia
S. Bhargava
V. K. Jairath
Ravi Kant
J. J. Irani
N. N. Wadia
R.A. Mashelkar
n Munjee
Prakash M Telang

Chairman
Director
Director
Director
Director
Director
Vice Chairman
Director
Director
Director
Director
Director











 
 

Mr. R. C. Bhargava
Mr. Shinzo Hakanishi
Mr. Manvinder Singh Banga
Mr. Amal Ganguli
Mr. D. S. Brar
Mr. Keiichi Asai
Mr. Osamu Suzuki
Mr. Shuji Oishi
Ms. Pallavi Shroff
Mr. Kenichi Ayukawa
Mr. Tsuneo Shashi

Chairman
MD and CEO
Director
Director
Director
Director
Director
Director
Director
Director
Director &
Managing
Executive
Office (Production)

 Maruti

Suzuki

Products (CAR)
 Maruti Grand Vitara Diesel
 Maruti 02
 Maruti SX4 Diesel
 Maruti Cervo
 Maruti Kizashi
 Maruti xl7
 Maruti APV
 Maruti Jimny

Expected Launch
December- 2009
December 2009
December 2009
December 2009
December 2009
March 2010
June 2010
July 2010

Car
 Tata
 Tata
 Tata
 Tata

Expected launch
indica vista IGNIS Sept 2009
indigo vista
Sept 2009
indicruz
Nov 2009
prima
Aug 2010

 Technical

analysts track price
movements and trading volumes in
various securities to identify patterns in
the price behavior of particular stocks,
mutual funds, commodities, or options
in specific market sectors or in the
overall financial markets .

Accumulation

Public
participation

Continuatio
n

Excess
Upstrea
m

Correctio
n

3.

The first tenet is that the market has three trends i.e.;
Up trends
Down trends
Corrections
The second tenet is that the trend have three phases i.e;
Accumulation
Public participation
Excess
The third tenet is that the market counts all news.

4.

The fourth is that the averages must confirm each other.

5.

The fifth tenet is that trends are confirmed by volume.

6.

The sixth tenet says that trends exist until definite signals prove that they
have ended

1.

2.

Upstrea
m

Primary trend

Deviation
Reaction
rally

 SENSEX

AND TATA MOTORS

This Technical tool helps in telling that what
would be the price band of share price in which
it move in near future on the basis of past high
and low levels made by a particular scrip.
 Resistance Level shows the price above which
share price will not move in normal case on the
other hand Support level shows the minimum
share price which can be touched by share or
crossing of this share will not be there in
normal market condition

Resistance
Level
Rs.1425
approx.

Support level
RS.1275 approx.

Resistance Level
Rs.490 approx.

Support Level
Rs.430 approx.

A

Moving Average is an indicator that
shows the average value of a security's
price over a period of time. The method
of interpreting a moving average is to
compare the relationship between a
moving average of the security's price
with the security's price itself.

A crossover occurs when a faster Moving
Average crosses either above a slower
Moving Average which is considered a bullish
crossover or below which is considered a
bearish crossover. M.A.C helps in telling
buying opportunities when the shorter
moving average crosses above the longer
moving average and selling opportunities
when the shorter moving average
crosses below the longer moving average.

20 Periods MA

S

B

50 Periods MA

Buy

No Sell Position or
Always Position of Buy

Sign up to vote on this title
UsefulNot useful