Lets have a test drive of-Fundamental Analysis of Automobile in India

INDUSTRY OVER-VIEW

•The automobile industry in India is the 9th largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.

During the year 2009, several new commercial launches happened, but the significant one was the commercial rollout of the world's cheapest car, Tata Nano. We also saw some of the most expensive models like Phantom (about $750,000) and the Ghost ($250,000) from Rolls Royce and Volkswagen's famed Beetle ($40,000). During the year, the overall car market grew around 15 % over 2008, and a similar pattern is expected in the coming year too.

INDUSTRY OVER-VIEW As per Ernst and Young’s report, the Indian

passenger car market is expected to grow at 12% annually over the next five years

Several analysts forecast, "The industry's turnover is estimated to touch $155 billion by 2016.“

If the trend continues like this, then the Indian auto industry would be the seventh largest auto industry in the world. It would also be the third largest in that sector by 2030, after China and the US.

As per India’s Automotive Mission Plan, India can be the leading car maker within the next five years. At present, Indian car industry contributes over 5% in that sector and it can then touch to 10% by 2016.

The Key Players…

Commercial vehicles

TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors

Passenger vehicle

TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors

Two Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors

Three Wheeler Bajaj Auto, Piaggio India

Bajaj Auto, 24.4%

TVS Motors, 17.7%

Yamaha, 3.8%

Others, 5.8%

Honda Motors, 8.5%

Hero Honda, 39.8%

Maruti, 50.37

Hyundai, 19.17

Tata Motors, 17.19

Honda, 5.33

Others, 5.73

Two wheeler Passenger vehicle

Snippets

1. The first automobile in India rolled in 1897 in Bombay.2. India is being recognized as potential emerging auto

market.3. Foreign players are adding to their investments in Indian

auto industry.4. Within two-wheelers, motorcycles contribute 80% of the

segment size.5. Unlike the USA, the Indian passenger vehicle market is

dominated by cars (79%).6. TATA dominates over 60% of the Indian commercial vehicle

market.7. 2/3rd of auto component production is consumed directly

by OEMs.8. India is the largest three-wheeler market in the world.9. India is the largest two-wheeler manufacturer in the world.10. India is the second largest tractor manufacturer in the

world.11. India is the fifth largest commercial vehicle manufacturer in

the world.12. The number one global motorcycle manufacturer is in India.13. India is the fourth largest car market in Asia - recently

crossed the 1 million mark.

Company overview:

Maruti Tata

Sales: 296,230. Market leader IN

passenger car segment.

Over 54.2% foreign investment.

Only 8% share held by investors other than institutional.

Sales: 38364. Market leader in

commercial car segment.

Among top three in passenger car segment

Over 41% share of Indian promoter.

11% is held by general public.

Maruti Suzuki (2010)Particular No. Of Shares Percent Shares(%) Promoter Holding     Indian Promoters

00.00 Foreign Promoters 54.21 Non-Promoter holdings (Other than Public)     Financial Institutions/Banks

14.10 FII/Foreign Fin Inst/Foreign Banks 20.09 Corporate Bodies 6.00 Government Holdings 00.00 NRI

00.00 Mutual Funds 2.92 Other Foreign Holdings 0.07 General Public  Individual Holding Upto Rs. 1 lakh 2.39 Individual Holding Excess of Rs. 1 lakh 0.09 Others 0.15 Total 288910060

100.00

Tata Motors Ltd(2010)

Indian promoters 38.00

Foreign promoters 0.00 Other promoters 0.07 MFs/UTI 2.23 Banks/FIs 0.28 FIIs 15.67 Public corporate bodies 0.62 Indian public 8.83 NRIs 7.14 No of shares

479737904

Share Holding Pattern

Fundamental Analysis

Amalgamation of quantitative and qualitative analysis.

Quantitative: capable of being measured or expressed in numerical terms.

Qualitative: related to or based on the quality or the character of something i.e. opposed to its size or quantity.

Maruti SuzukiFundamentals

Market Capitalization  ( Rs cr ) 37,985.89

Book Value 409.64

Debt / Equity 0.06

P/E 15.21

EPS 86.45

Return on Net Worth 20.85

Current Ratio 1.20

Quick Ratio 0.67

Interest Cover 131.98

Dividend History (Rs.)Maruti Suzuki

26-Aug-2010- 6.00

21Aug-2009- 3.50

20-Aug-2008- 5.00

24-Aug-2007- 4.50

25-Aug-2006- 3.50

Ratio Analysis

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10Interest Cover 90.62 61.01 40.93 34.21 107.36

Inventory Turnover Ratio

14.15 21.27 22.93 30.46 26.43

Debtors Turnover Ratio

19.45 21.12 25.76 26.33 33.65

Earnings Per Share 41.16 54.07 59.91 42.18 86.45

Return On Capital Employed(%)

33.46 30.65 26.18 17.37 28.41

Cont…

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

Current Ratio 1.77 1.40 0.91 1.51 1.02

Quick Ratio 1.31 1.13 0.66 1.26 0.68

Debt Equity Ratio

0.01 0.09 0.11 0.07 0.07

Long Term Debt Equity Ratio

0.01 0.09 0.06 0.07 0.07

Tata Motors

Fundamentals

Market Capitalization  ( Rs cr ) 586.99bn

Book Value 262.30

Debt / Equity 1.11

P/E

EPS 39.26

Return on Net Worth 14.96

Current Ratio 0.60

Quick Ratio 1.11

Interest Cover 2.77

DividendTata MotorsAnnouncement Date Effective Date% Dividend Dividend

Type

May 27, 2010 Aug 10, 2010 150 Final

May 29, 2009 Aug 03, 2009 60 Final

May 28, 2008 Jun 16, 2008 150 Final

May 18, 2007 Jun 01, 2007 150 Final

Record Date

Ex Bonus Date

Ratio

Nov 01, 1995

Oct 04, 1995 3:5

Ratio AnalysisRs. in Cr. Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006

Debt-Equity Ratio (x)

4.85 3.03 1.11 0.75 0.57

Long Term Debt-Equity Ratio (x)

2.98 1.84 0.59 0.46 0.50

Current Ratio (x)

0.74 0.81 1.06 1.20 1.13

Return On Capital Employed (%)

10.58 0.00 20.48 28.88 32.15

Ajdusted Net Profit Margin (%)

1.54 -3.72 5.00 6.11 6.45

To be Presented by Anurag

Technical Analysis

Moving Average Convergence & Divergence

Bollinger Bands

Relative Strength Indes

Todays Performance

Volume Price Relationship

Technical Analysis

Bollinger Band Up 1362.61 Bollinger Band Middle 1274.39 Bollinger Band Low 1186.16

Relative Strength Index 88.9821

Technical Analysis

Bollinger Band Up 1056.59 Bollinger Band Middle 1019.1 Bollinger Band Low 981.616

Relative Strength Index 59.8716

Maruti vs Auto vs Sensex

Maruti Suzuki Today

Stock Price Movements

Day's High / Low 1,404.00 / 1,355.00

Previous Close / Open

1,369.60 / 1,365.10

Wtd. Avg Price 1,386.02

Total Traded Value (Cr.)

46.43

TTQ / 2W Avg Q (Lakh)

3.35 / 0.93

Circuit Limits NA

Mkt. Cap. Full / Free Float (Cr.)

40,064 / 20,032

1,386.75

+17.15 ( 1.25% )

Tata Motors Today

Day's High / Low 1,040.80 / 1,020.00

Previous Close / Open

1,024.30 / 1,025.10

Wtd. Avg Price 1,031.38

Total Traded Value (Cr.)

45.32

TTQ / 2W Avg Q (Lakh)

4.39 / 10.79

Circuit Limits NA

Mkt. Cap. Full / Free Float (Cr.)

52,095 / 33,861

Stock Price Movements

1,028.80

+4.50 (0.44% )

Comparison from the Eyes of Investors

Particulars Maruti Suzuki Tata Motors

Net Profit 7.84 % 1.54%

Debt-Equity Ratio (x)0.06 1.11

Earning Per Share87 42

Current Ratio (x)1.20 0.60

Return On Capital Employed (%)

31.64 10.58

2010 2009 2008 2007 2006

Maruti 87.07 42.18 59.91 54.07 41.16

Tata motors 42.56 0 53.68 53.45 42.36

5

15

25

35

45

55

65

75

85

95

Earning Per Share

2010 2009 2008 2007 2006 2005

Maruti 4.3 5.72 9.34 10.29 9.53 7.57

Tata 2.4 3.77 6.96 6.94 7.35 7.02

1

3

5

7

9

11

Net Profit

F&O Stratgy for Maruti

Futures are ruling in discount, mainly on account of fresh short positions. Option trading presents a weak trend for the stock.

F&O for Maruti

The market lost on three out of the five sessions last week on fears of slowdown in the global economy and in the absence of any positive trigger on home front.The market may primarily take cues from the global markets and move accordingly. Meanwhile, the GDP data for the JULY – AUG 2010 quarter, is released which provided some direction to the market. Further, sales and dispatch figures from the automobile and cement manufacturers will also provide some cues for the market’s direction this week and stocks from these sectors may react accordingly.

FUTURE PLANS:MARUTI

Industry Market share-• Current market covarge-55%1. Positive trend in automobile industry especially four vehicles.2. Capacity enhancement in Manesar plant, Haryana[600 acres and 300,000

cars/annum.]3. Focusing on hatchback & models due to positive growth of more than 25%

&35% respectively in these category.4. Enhancing network-i. Covering more cities ii. True value outletsiii. Dealer workshopiv. Service network5. Launching new carsI. EECO- The Family CarII. Brand extension of most reliable car of Maruti Alto as Alto k10III. working on a small as well as economical car to counter TATA NANO.6. Putting huge cost on R&D on new advanced KB engine to be at par with

JAPAN.

Maruti Suzuki

• MARUTI – increased in terms of sales but decreased in terms of EBITDA & PAT in last year due to invest a lot in internal expenditure . In near future company will follow cost cutting to recover .

• Trying to less the margin between domestic & export sales volume to have global exposureI. World class port infrastructure .II. More efficient logistics.

• Perception about domestic market growth in FY 10 at 5%.

Huge customer potentialI. Rural Maket-8% of Maruti salesII. Government Employees- 15% of Maruti Sales

Huge investment- Cash Position : 32 bn rupees(as on 31st Dec 2008)I. FY 10- 29 bn Rs.II. FY 11- 13 bn Rs.III. FY 12 – 04 bn Rs.

CSR- I. National Road Safety Mission: NRSMII. Institute of Driving Training & Research: IDTR at Gujrat, Haryana &

Uttarakhand.

TATA MOTORS• Market Share : Net revenue is increased 63% in first quarter of FY 2010-2011 as comparison to FY 2009-1010 by which making some expansion plans Tata Motors in set to capture four wheeler market in india.

Going Global: TATA is set to get some global exposure after acquiring Jaguar & Land Rower. Tata got a huge business of JLR in china recently.

Expanding production capacity.

Innovative INNOVA.

Expanding value based network.

CSR activities.

Recommendations

Maruti Suzuki

•Awarded the highest financial credit rating of AAA/stable (LT) and P1+ (ST).• Rise in Yen and fall in Rupee.•New launches by Maruti Suzuki.•Share holding pattern :- 2% dependency on public.•India's top automaker Maruti Suzuki plans to invest $1.3 billion over the next three years on manufacturing plants to boost capacity.•Sales of vehicles in the domestic market increased to 870,790 as compared to 722,144 in the previous year showing a growth of 21%.

Tata motors Share holding pattern :- 11% dependency on public . The Company recorded a sale of 633,862 vehicles in 2009-

10, a growth of 34% over previous year (472,885 vehicles) in the domestic market in India, representing a 25.5% share in the industry (improving from 24.4% share in the previous year).

Change of Ratan Tata. Tata Motors plans to invest Rs9,000 cr over three years.