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Fundamental analysis is performed on historical and present data, but with the goal of

making financial forecasts. There are several possible objectives:

 to conduct a company stock valuation and predict its probable price evolution,
 to make a projection on its business performance,
 to evaluate its management and make internal business decisions

Fundamental analysis maintains that markets may misprice a security in the short
run but that the "correct" price will eventually be reached. Profits can be made by
trading the mispriced security and then waiting for the market to recognize its
"mistake" and reprice the security.

Fundamental analysis includes:

1. Economic analysis
2. Industry analysis
3. Company analysis

On the basis of these three analyses the intrinsic value of the shares are determined.
This is considered as the true value of the share. If the intrinsic value is higher than the
market price it is recommended to buy the share . If it is equal to market price hold the
share and if it is less than the market price sell the shares.
Macroeconomic Analysis

GDP

The Gross Domestic Product (GDP) in India expanded at an annual rate of 8.80 percent
in the last reported quarter.

From 2004 until 2010, India's average quarterly GDP Growth was 8.37 percent reaching
an historical high of 10.10 percent in September of 2006 and a record low of 5.50
percent in December of 2004.

The economy has posted an average growth rate of more than 7% in the decade since
1997, reducing poverty by about 10 percentage points.

Country Interest Rate Growth Rate Inflation Rate

India 5.00% 8.80% 11.25%


GDP growth rate of India

Mar Jun Sep Dec

Year

2010 8.60 8.80

2009 5.80 6.00 8.60 6.50

2008 8.50 7.80 7.50 6.10


India’s GDP

Year Value

2009 1296.09

2008 1159.17

Foreign direct investment

Foreign direct investment are the net inflows of investment to acquire a lasting
management interest (10 percent or more of voting stock) in an enterprise operating in
an economy other than that of the investor. It is the sum of equity capital, reinvestment
of earnings, other long-term capital, and short-term capital as shown in the balance of
payments. This series shows net inflows (new investment inflows less disinvestment) in
the reporting economy from foreign investors. Data are in current U.S. dollars.

Source International Monetary Fund, International Financial Statistics and Balance of


Payments databases, and World Bank, Global Development Finance.

2005 2006 2007 2008 2009


7,60,64,25, 20,33,59,47, 25,12,71,55, 41,16,86,05, 34,57,70,00,
242 448 852 242 000

Inflation:

The inflation rate in India was last reported at 11.25 percent in July of 2010.

From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an
historical high of 34.68 percent in September of 1974 and a record low of -11.31
percent in May of 1976.
Country Interest Rate Growth Rate Inflation Rate Jobless Rate Current Account Exchange Rate

India 5.00% 8.80% 11.25% 8.00% -13 45.0150

India’s Inflation rate

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2010 16.22 14.86 14.86 13.33 13.91 13.73 11.25

2009 10.45 9.63 8.03 8.70 8.63 9.29 11.89 11.72 11.64 11.49 13.51 14.97

2008 5.51 5.47 7.87 7.81 7.75 7.69 8.33 9.02 9.77 10.45 10.45 9.70

Considering the data for the past five years, 2005-06 to 2009-10, it is seen that there is
not much difference in average inflation rate between the new series and the old series
which is about 5.5 per cent .
Table 1 : Annual WPI Inflation: New vis-à-vis Old Series
(per cent)

Base Average2005-
Items Weight 2010-11*
Year 06 to 2009-10
2004-05 100.0 5.5 10.0
WPI- All Commodities
1993-94 100.0 5.4 10.6
2004-05 20.1 9.2 19.3
1. Primary Articles
1993-94 22.0 7.9 16.8
2004-05 14.9 5.9 13.5
2. Fuel & Power
1993-94 14.2 4.2 13.6
2004-05 65.0 4.1 5.6
3. Manufactured Products
1993-94 63.7 4.8 6.8
Memo items
a. Food Articles & Food 2004-05 24.3 8.1 14.2
Products 1993-94 26.9 7.7 10.2
b. Non-Food Manufactured 2004-05 55.0 3.7 5.5
Products 1993-94 52.2 4.2 7.2
* Relates to the period April-August.

Finally, with the reduction in average inflation and inflation volatility, since the mid-
1990s, tolerance for high inflation has come down.

The moderation of inflation trend has had several beneficial effects in terms of lower
nominal interest rate and high GDP growth rate

Given the remarkable stability in the inflation rate since the mid- 1990s, it is important
to persevere with appropriate policy responses so that the high inflation seen in the
recent months does not get entrenched.

Even if the trigger for inflation is from supply side, its persistence necessitates
monetary policy responses to bring the inflation rate back to its trend and anchor
inflationary expectations.

Rates:
The benchmark interest rate (reverse repo) in India was last reported at 5.00 percent. In India, interest rate
decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest rate
is the benchmark repurchase rate. ,From 2000 until 2010, India's average interest rate was 5.82 percent
reaching an historical high of 14.50 percent in August of 2000 and a record low of 3.25 percent in April
of 2009. This page includes: India Interest Rate chart, historical data and news.

Country Interest Rate Growth Rate Inflation Rate Jobless Rate Current Account Exchange Rate

India 5.00% 8.80% 11.25% 8.00% -13 45.0150

Sector analysis

It contributes 4% in India’s GDP & 5% in India’s


Industrial Production
Despite economic slowdown that has affected the automobile industry, production and
exports of the sector went up last fiscal, said the Economic Survey
2008-09
Passenger car sales grew by 0.31% in FY09 ,various tax relief policies, easy
accessibility of finance, launch of new models and exciting discount offers for the growth
in car sales in the last one year

There was not a marked impact of recession


•Sales of automobiles fluctuate across the year
•The Mid size & Premium segment were affected
•The decline in sales were in the range of 15%-20%
•Now the market have recovered with a sales increase of 20 %
The Small car segment or Economy segment showed
consistent sales as those people who prefer these
segments were either purchasing because of need
•The Mid Sized Segment showed a drop as the
customers for these segments are those who actually
have a car for their utility and are looking for a new
car that will satisfy their status requirement. At the
point of recession people began to rethink, weather it
is wise to spend money on luxury
•Luxury segment showed no drop as customers of this
segment are those who have money and are capable
of spending
Automotive manufacturer looking at exploring new markets
in Southeast Asia and South America, to boost revenues

According to SIAM, the total automobile sales in the domestic market was reported
1114157 units in January , increasing by 44.9% while for the same period last year
7,68,698 units were reported sold.

Car sales in January saw a growth of 32% as it was reported 145000 units in the first
month of 2010. The data for car sales surprised the analysts as it beats the previous
best of 133000 sales recorded in November 2009, according to the data released by
SIAM.

While analysts in the industry see the low interest rates for car loans and economic
recovery as important factors for this growth. Analysts also said fear of a hike in taxes in
the Union Budget also aided the growth. Now the expectations are there by the industry
experts that the total domestic industry will end the current financial year at over 11
million units, which will be a growth of 22.6% over 2008-09.

Following a temporary setback on account of the global economic recession, the Indian
automobile market has once again picked up a remarkable momentum witnessing a
buoyant sale for the first time in its history in the month of September 2009.

Recently, the automotive giants of India including General Motors (GM), Volkswagen,
Honda, and Hyundai, have declared significant expansion plans. On account of its huge
market potential, a very low base of car ownership in the country estimated at about 25
per 1,000 people, and a rapidly surging economy, the nation is firmly set on its way to
become an outsourcing platform for a number of global auto companies

One can say that the automobile industry in the country has occupied a solid space in
the platform of Indian economy. Empowered by its present growth, today the
automobile industry in the country can produce a diverse range of vehicles

Company Analysis
Maruti Suzuki India Limited a partial subsidiary of Suzuki Motor Corporation of Japan, is India's
largest passenger car company, accounting for over 45% of the domestic car market. The
company offers a complete range of cars from entry level Maruti-800 and Alto, to stylish
hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility
vehicle Grand Vitara

It was the first company in India to mass-produce and sell more than a million cars. It is largely
credited for having brought in an automobile revolution to India. It is the market leader in India
and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited.
The company's headquarters are located in Delhi.

The company annually exports more than 50,000 cars and has an extremely large domestic
market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest
selling compact car ever since it was launched in 1983. More than a million units of this car have
been sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts and Maruti
Suzuki Swift is the largest selling in A2 segment.

Maruti Suzuki has been the leader of the Indian car market for over two decades.

More than half the cars sold in India are Maruti Suzuki cars. The company is a subsidiary of
Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned
by public and financial institutions. It is listed on the Bombay Stock Exchange and National
Stock Exchange in India.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over
six million Maruti Suzuki cars are on Indian roads since the first car was rolled out on 14
December 1983.

Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated
first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia
Pacific
Ratios

Mar Mar Mar Mar Mar


'06 '07 '08 '09 '10
Profitability Ratios
Operating
Profit 15.29 14.88 14.12 9.18 12.74
Margin(%)
Gross Profit
16.95 16.66 10.97 5.77 9.93
Margin(%)
Net Profit
9.53 10.29 9.34 5.72 8.34
Margin(%)
Return On
Capital 33.46 30.65 26.18 17.37 27.89
Employed(%)
Return On Net
21.81 22.79 20.56 13.04 21.1
Worth(%)
Return on Long
Term Funds(% 33.47 30.74 27.35 17.48 28.8
)
Liquidity And Solvency
Ratios
Current Ratio 1.77 1.4 0.91 1.51 0.91

Quick Ratio 1.31 1.13 0.66 1.26 0.68


Debt Equity
0.01 0.09 0.11 0.07 0.07
Ratio
Long Term
Debt Equity 0.01 0.09 0.06 0.07 0.04
Ratio
Management Efficiency
Ratios
Inventory
14.15 21.27 22.93 30.46 30.47
Turnover Ratio
Debtors
19.45 21.12 25.76 26.33 33.92
Turnover Ratio
Investments
18.78 28.76 22.93 30.46 30.47
Turnover Ratio
Fixed Assets
6.59 6.32 2.48 2.38 2.82
Turnover Ratio
Total Assets
2.21 1.98 1.94 2.06 2.32
Turnover Ratio
Asset Turnover
2.46 2.41 2.48 2.38 2.82
Ratio
Mar Mar Mar Mar Mar
'06 '07 '08 '09 '10
Earnings
41.16 54.07 59.91 42.18 86.45
Per Share
Book Value 188.73 237.23 291.28 323.45 409.65

P/L account details

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Operating Profit 1,897.70 2,256.10 2,628.70 1,976.60 3,824.60


Reported Net
Profit 1,189.10 1,562.00 1,730.80 1,218.70 2,497.60