Portfolio-sujay and Vaidehi

8/14/2019 Portfolio-sujay and Vaidehi

1/27

Sri Sri Institute of Management Studies

AUTO TWO WHEELERINDUSTRY

Hero Honda Motors Ltd

TVS Motors Company Ltd

Bajaj Auto Ltd

2009

Submited by

Sujay Shetty

Vaidehi Joshi

Project report submitted in partial fulfilment of the requirements for the course of

Security and Portfolio Analysis as part of the Post Graduate Program in

Management


2/27

2

Chapters

1 Brief Introduction and overview of the Industry------------------------------------------3

2 Industry and Company Analysis-----------------------------------------------------------4

2.1 Players in the two wheeler industry-------------------------------------------------------4

2.2Market Segmentation and Share of Firm in the Industry-------------------------------5

2.3Company Progress---------------------------------------------------------------------------7

2.4Financial Snapshots -------------------------------------------------------------------------7

2.4.1 Hero Honda-------------------------------------------------------------------------------- 7

2.4.2 TVS------------------------------------------------------------------------------------------8

2.4.3 Bajaj-----------------------------------------------------------------------------------------9

2.4.4 Share Holding patterns of the 3 companies--------------------------------------------9

2.5.1What is expected by the industry? ------------------------------------------------------12

2.5.2What is expected of the industry? ------------------------------------------------------12

2.6.1 Demand Drivers -------------------------------------------------------------------------12

2.6.2 Indian Auto Policy 2002---------------------------------------------------------------12

2.7 Porters Model-------------------------------------------------------------------------------13

2.8 SWOT Analysis-----------------------------------------------------------------------------14

2.9 Ratio Analysis-------------------------------------------------------------------------------15

3 Fundamental Analysis-----------------------------------------------------------------------19

3.1Economic Factors---------------------------------------------------------------------------19

4 Technical Analysis---------------------------------------------------------------------------22

4.1 Bajaj Auto Ltd------------------------------------------------------------------------------22

4.2 TVS Motor Ltd------------------------------------------------------------------------------23

4.2 Hero Honda Pvt Lt-------------------------------------------------------------------------24

5 Recommendations----------------------------------------------------------------------------25


3/27

3

The Indian two-wheeler industry has come long way since its beginning in 1948 when

Bajaj Auto started importing and selling Vespa Scooters in India. Over the time customer

preferences have changed in favour of motorcycles and gearless bikes that score higher on

technology, fuel economy and aesthetic appeal, at the expense of metal-bodied geared

scooters and mopeds. These changes in customer preferences have had an impact on fortunes

of the players. The players have either perished or have significantly lost market share,

whereas new leaders have emerged. However currently, India is the second largest producer

of two-wheelers in the world. It stands next only to China and Japan in terms of the number

of two-wheelers produced and the sales of two-wheelers respectively.

The demand and sale of the two wheelers have been affected by rising income levels,

reducing excise duties, higher loan tenure and loan-to-value offered by the financing

companies. Also the mounting traffic chaos and limited parking space has also increased the

demand for two-wheelers from households that can afford or actually do own a car. The two

wheeler industry has also been affected with increasing women working population, changing

social philosophy and broad mindedness.

Abundant and low cost labour coupled with local availability of raw materials like

steel, aluminium and natural rubber has placed India amongst the low cost producing centres

of two-wheelers. It anticipates buoyant growth in two-wheeler exports as well.

The recent recession , slow down in the economy world wide and subdued macro

economic scenario has caused poor consumer confidence level thus affecting the overall same

of two wheels. However slow but steady penetration, rising income levels makes the long

term outlook healthier. The post recession scenario shows increase in the sales of the auto

two wheeler industry. In the FY 2009,the sales have risen by 5% from the FY 2008. Also the

demand for 3 wheelers in rural India is slowly being replaced by two wheelers.


4/27

4

2.1 Players in the Two Wheeler Industry

There are many two-wheeler manufacturers in India. Major players in the 2-wheelerindustry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor

Company Ltd (TVS)

The other key players in the two-wheeler industry are Kinetic Motor Company Ltd

(KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India Ltd

(Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda

Motorcycle & Scooter India (P) Ltd (HMSI).

This counts to around 10 two-wheeler manufacturers in the country, they being Bajaj,

Hero, Hero Honda, Honda, Indus, Kinetic, Royal Enfield, Suzuki, TVS, and Yamaha. The

latest trend in the two-wheeler market is the introduction of electrically operated vehicles

from a range of manufacturers such as Indus and Hero. These can be recharged from

convenient household electrical points. The only disadvantage is speed, which is restricted to

around 25 miles per hour. Currently, the motorcycle market is witnessing a demand for

higher volume engines.


5/27

5

2.2 Market Segmentation and Share of Firm in the Industry

The composition of the industry consists of motorcycles, scooters and mopeds. Over

the past decade, there has been a consumer preferential shift from mopeds to scooters andnow motorcycles. On account of the shift, the motorcycle segment dominates the twowheeler

industry with a market share of close to 80%. The motorcycle segment is further sub divided

into 3 classes, starting from the entry/economy class (Rs 30,000 Rs 40,000), executive class

(Rs 40,000 Rs 50,000) and the premium class (>Rs 50,000).

The motorcycle segment is primarily led by Hero Honda, the market shares are given below

Hero Honda 59%Bajaj Auto 18%

HMSI 9%

TVS Motors 7%

Yamaha 5%

On the other hand the scooter segment is led by HMSI which has a dominant share of 63%

followed by TVS Motors (16%) and Hero Honda (14%). When it comes to the moped

segment, it is primarily dominated by TVS Motors with a market share of almost 100%.

Company wise market share of

players -2008

JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV

HMSI 59% 63% 63% 57% 57% 59% 57% 55% 56% 57% 61%

TVS 21% 17% 19% 23% 23% 22% 23% 24% 24% 21% 17%

SMIPL 7% 7% 6% 7% 7% 8% 4% 8%

KHML 11% 9% 8% 7% 10% 11% 12% 13% 12% 15% 14%

KML 4% 4% 4% 4% 3% 0% 3% 0% 2% 3% 0%

BAL 1% 1% 1% 1% 1% 1% 1% 1% 1% 2% 1%


6/27

6

2.3 Company Progress

The market leader Hero Honda registered a healthy growth of 12 % in its domestic

sales whereas Bajaj Auto disappointed with its domestic sales plunging by 23% in FY09 overFY08.

In October 2008, sales of TVS Motor came down to 117,101 Units from 129,614

Units in October 2007. Bajaj Auto Limited also witnessed a decrease of 34% in the sales of

two-wheelers in October 2008 on a YOY basis. The industrial body, Society of Indian

Automobile Manufacturers (SIAM), revealed that during 2007-2008, a total of 7,248,589

two-wheelers were sold in India. TVS Motors saw its domestic sales dropping marginally by

1.4 % in FY09, but in contrast, Honda Motorcycles and Scooters India (HMSI), a whollyowned subsidiary of Honda Motor Company, recorded a robust 16.5 % growth in domestic

sales in India.

Hero Honda has recently launched Karizma ZMR in its premium segment. One of the

key pillars of winning strategy for Hero Honda has been to consistently keep introducing

new, advanced products and maintaining a balanced product portfolio. The ZMR is set to

further augment its steadily growing presence in the premium segment. The company will

target youngsters within the age group of 18-24 years as its potential customers for this

product. The new ZMR is the fifth model from Hero Honda in the premium segment. It

currently sells Hunk, Achiever, CBZ Xtreme and Karizma. . Hero Honda has a network of

more than 3500 strong and dedicated Authorized dealers. A network that has helped Hero

Hondas name and its promise of reliable quality to every part of the country.

The second-largest motorcycle manufacturer in the country, Bajaj Auto, sold 183,051

units of motorcycles in the month of August this year, clocking a 4 per cent growth compared

with the sales achieved in the same month last year. This is the first time in the current

financial year of 2009-10 that the companys two-wheeler sales have been positive.

The market leader Hero Honda registered a healthy growth of 12 % in its domestic

sales whereas Bajaj Auto disappointed with its domestic sales plunging by 23% in FY09 over

FY08. Likewise, TVS Motors saw its domestic sales dropping marginally by 1.4 % in FY09


7/27

7

2.4 Financial Snapshots

2.4.1Hero Honda Motor Pvt Ltd

Financial Snapshot (Rs.in millions)Mkt. Cap 317033.86P/E 17.62Div 1000.00EPS (TTM) 90.13Book Value 190.33Debt Equity Ratio 0.02Return On Networth 33.72

Current Ratio 0.46Quick Ratio 0.31

NETSeptember

2009June2009

March2009

December2008

Sales 40594.40 38224.40 34225.20 28812.70Profit 8189.80 6980.60 6029.50 4693.30

2.4.2 TVS MOTORS Pvt Ltd

Financial Snapshot (Rs.in millions)Mkt. Cap 13694.39P/E 22.88Div 70.00EPS (TTM) 2.52Book Value 34.23Debt Equity Ratio 1.11Return On Networth 4.21Current Ratio 1.15Quick Ratio 0.68

NETSeptember

2009June2009

March2009

December2008

Sales 11298.67 9886.97 9227.20 8687.13Profit 494.42 457.99 369.62 253.95


8/27

8

2.4.3 Bajaj Motors Pvt ltd

Financial Snapshot (Rs.in millions)Mkt. Cap 209465.55P/E 17.39Div 220.00EPS (TTM) 83.26Book Value 129.23Debt Equity Ratio 0.84Return On Networth 38.92

Current Ratio 0.92Quick Ratio 0.73

NETSeptember

2009June2009

March2009

December2008

Sales 28875.10 23384.70 18834.10 21031.00Profit 6582.40 4725.90 3035.50 3347.00


9/27

9

2.4.4 Shareholdings of the comapnies

Hero Honda

Share holding

Share holding pattern as on : 30/09/2009 30/06/2009 31/03/2009

Face value 2.00 2.00 2.00

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

Promoter's holding

Indian Promoters 57830555 28.96 57831555 28.96 57833555 28.96Foreign Promoters 51918750 26.00 51918750 26.00 51918750 26.00

Sub total 109749305 54.96 109750305 54.96 109752305 54.96Non promoter's holding

Institutional investors

Banks Fin. Inst. and

Insurance

8552615 4.28 8357937 4.19 9676369 4.85

FII's 56940905 28.52 57028389 28.56 53983362 27.03Sub total 73315092 36.71 73408301 36.76 73090280 36.60

Other investors

Private Corporate

Bodies

869300 0.44 878992 0.44 1169640 0.59

NRI's/OCB's/Foreign

Others

192913 0.10 177481 0.09 181115 0.09

Others 1267625 0.63 1303422 0.65 1601142 0.80Sub total 2329838 1.17 2359895 1.18 2951897 1.48General public 14293265 7.16 14168999 7.10 13893018 6.96Grand total 199687500 100.00 199687500 100.00 199687500 100.00


10/27

10

TVS Motor Pvt Ltd

Share Holding as on : 30 Sep 2009 30 Jun 2009 31 Mar 2009Face Value 1.00 1.00 1.00

No. OfShares

%Holding

No. OfShares

%Holding

No. OfShares

%Holding

PROMOTER'S HOLDING

Indian Promoters 143,587,893 60.45 143,587,893 60.45 136,341,393 57.40

Sub Total 143,587,893 60.45 143,587,893 60.45 136,341,393 57.40

NON PROMOTER'S HOLDING

Institutional InvestorsMutual Funds andUTI

7,849,626 3.30 4,528,368 1.91 4,070,226 1.71

Banks Fin. Inst. andInsurance

23,067,685 9.71 22,947,609 9.66 22,955,109 9.66

FII's 9,088,868 3.83 11,028,475 4.64 5,145,185 2.17

Sub Total 40,006,179 16.84 38,504,452 16.21 32,170,520 13.54

Other Investors

Private Corporate

Bodies11,479,698 4.83 12,478,853 5.25 23,100,372 9.72

NRI's/OCB's/ForeignOthers

862,491 0.36 983,035 0.41 1,132,802 0.48

Sub Total 12,342,189 5.20 13,461,888 5.67 24,233,174 10.20

General Public 41,607,296 17.52 41,989,324 17.68 44,798,470 18.86

GRAND TOTAL 237,543,557 100.00 237,543,557 100.00 237,543,557 100.00


11/27

11

Bajaj Auto Company

Share holding

Share holding pattern as on : 30/09/2009 30/06/2009 31/03/2009

Face value 10.00 10.00 10.00

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

Promoter's holding

Indian Promoters 71786036 49.62 71786036 49.62 71786036 49.62

Sub total 71786036 49.62 71786036 49.62 71786036 49.62

Non promoter's holding

Institutional investors

Banks Fin. Inst. andInsurance

4814099 3.33 6884224 4.76 9440543 6.52

FII's 23808308 16.46 23701669 16.38 19980919 13.81

Sub total 34903706 24.12 34366378 23.75 34348009 23.74

Other investors

Private CorporateBodies

12215699 8.44 12897907 8.91 12899841 8.92

NRI's/OCB's/Foreign

Others

624229 0.43 650537 0.45 650072 0.45

Others 167710 0.12 176775 0.12 181775 0.13

Sub total 13007622 8.99 13725203 9.49 13731672 9.49

General public 24986130 17.27 24805877 17.14 24817777 17.15

Grand total 144683494 100.00 144683494 100.00 144683494 100.00


12/27

12

2.5.1 What is expected by the industry?

The industry expects to reduce interest rates on auto loans and credit availability on twowheeler loans. The lack of finance and high interest rates limits the growth in both the two

wheeler industry. It also expects to retain the existing excise duty on two wheelers at 8%. The

reduction in the excise duty to 8% enabled the revival of the two wheeler industry. Thus

retention of the same will provide support for two wheeler industry to continue to grow. If the

customs duty on steel, aluminium etc is raised, then it will be negative for the auto industry in

general.

2.5.2 What is expected of the Industry?

Motorcycle sales will perform positively in future, exceeding 10 Million units by 2012-

13.Value of auto component exports is likely to attain a double digit figure in 2012-

13.Turnover of the Indian auto component industry is forecasted to surpass US$ 50 Billion in

2014-15.

2.6.1 Factors that drive the demand of Two Wheelers

Inadequate public transportation system, especially in the rural and semi urban areas.

Easy Availability of finance and credit.

Availability of fuel efficient and low maintenance models.

Price difference between two wheelers and passenger cars.

2.6.2 Indian Auto Policy 2002

The Government of India approved a comprehensive automotive policy in March 2002, the

main proposals of which are as under:

Foreign direct investment : Automatic approval is proposed to be granted to foreign equity

investment up to 100% for manufacture of automobiles and components.

Import tariff : Import tariffs are proposed to be fixed at a level such that they facilitate the

development of manufacturing capabilities as opposed to mere assembly.

Incentives for R&D : The weighted average tax deduction under the Income Tax Act, 1961

for automotive companies is proposed to be increased from current level of 125% (The


13/27

13

weighted average deduction for R&D was increased to 150% in the Union Budget 2004-05).

Further, the policy proposes to include vehicle manufacturers for a rebate on the applicable

excise duty for every 1% of the gross turnover of the company expended during the year on

R&D.

Environmental aspects : Adequate fiscal incentives are proposed to promote the use of low-

emission auto fuel technology (in line with the Auto Fuel Policy). The auto policy states the

Government's intent to align domestic policy with the international practice of imposing

higher road tax on old vehicles so as to discourage their use.

2.7 PORTERS MODEL

Barriers to entry

Below are the points which play Key roles for new entrants:

Economies of scale/capital investment

Cost & resource disadvantage (patents, locked-in partnerships with suppliers/customers)

Learning & experience curves

Brand preferences & loyalty

Access to distribution channels

Regulatory prices

Tariffs & international trade restrictions

Industry attractiveness (growth/profitability

On account of the fragmentation of the industry, competition

would prevail, but new entrants are unlikely to survive this cycle.

Bargaining Power of Suppliers

The suppliers enjoy bargaining power in the case of high end and premium segment of bikes.

The customers also have specific demands catering to the segment and brand.

Bargaining Power of Purchaser

There is a high bargaining power of purchasers in the Auto industry in general sector. It

doesnot exist in the niche market if bikes though.


14/27

14

The purchasers in the general sector can bargain discounts, offers and credit as there are other

players offering similar products.

Rivalry amongst existing firms

There is a bulging competition with foreign players but only in the niche market. In the

domestic market though Hero Honda is leading player in bike segment, there exists

competition to capture the market. However the target customers differ in some cases.

Substitute threat

The industry faces threat of substitutes from better local transport like buses, local trains and

metros. Cheaper four wheelers coming up can also be a threat to the industry.

2.8 SWOT Analysis

1) StrengthsThe auto industry has an advantage that the industry cannot die in next 10 years atleast. It is a

convenient mode of transport which is the main feature a consumer demands for currently.

The auto two wheeler comes in latest styles, trends and are available in all price range.

2) WeaknessThe industry is immediately affected by changes in price of the Raw Materials like steel and

aluminium. It is also negatively affected by hike in the prices of petrol and diesel. The change

in the custom duties, excise duties and taxes affect the auto two wheeler industry.

India lacks latest technology. India is behind with consideration of technology.

3) OpportunitiesThere is booming demand from the target audience of girls and women.

The rural and semi urban areas have shown demand for two wheelers. With economy

booming in the rural India, the industry is target the rural market.

The regional areas with poor transportation facilities has high demand for two wheeler which

is an opportunity.


15/27

15

4) ThreatsThe Nano a one lakh rupee car has been seen as a threat to the two wheeler industry.

However the running and maintenance cost and the convenience given the Indian roads are

difficult to replace.

Electric Bikes being environmental friendly and cost effective can be a threat, but it can be

considered as a part of the industry.

Better infrastructure and metros can be considered as substitute threats.

2.9 RATIO ANALYSIS

LIQUIDITY RATIOS

1) Current Ratio2005 2006 2007 2008 2009

Hero Honda 0.35 0.49 0.57 0.48 0.46

TVS 0.78 0.89 1.04 1.07 1.15

Bajaj 0.79 0.84 0.88 0.84

The industry norm does not believe in 2:1 ratio for current ratio as cash is one of the prime

part of the current assets. Hero Honda and TVS shows a ratio of 0.60:1 on an average which

has been the industry norm. However TVS has high current ratio.

2) Acid Test Ratio

Hero Honda 0.22 0.35 0.4 0.32 0.31

TVS 0.41 0.39 0.52 0.47 0.68

Bajaj 0.69 0.76 0.64 0.73


16/27

16

TURNOVER RATIOS

1) Inventory Turnover Ratio

Hero Honda 36.57 38.74 36.25 42.82 47.53

TVS 12.69 11.06 11.86 9.61 13.31

Bajaj 34.14 36.88 29.33 28.64

The stock turnover ratio is having a positive trend for Hero Honda. However For

Bajaj it has reduced may be because of the recent demerger of the company.

2) Receivables Turnover Ratio

Hero Honda 111.41 70.26 40.11 32.7 55.1

TVS 66.53 69.76 45.46 32.31 27.25

Bajaj -- 22.66 21.93 27.45

3) Fixed Asset Turnover Ratio

Hero Honda 12.32 11.41 9.54 5.89 5.34

TVS 3.91 2.35 2.6 1.8 1.97

Bajaj 2.62 2.96 2.95 2.6

4) Total Asset Turnover Ratio

Hero Honda 4.54 4.2 3.99 3.52 3.36

TVS 3.32 2.81 2.67 2.16 2.14

Bajaj 1.21 1.32 3.02 2.53


17/27

17

LEVERAGE RATIO

1) Debt Equity Ratio

Hero Honda 0.14 0.09 0.07 0.04 0.02

TVS 0.28 0.5 0.78 0.81 1.11

Bajaj 0.31 0.29 0.84 0.84

The debt component has reduced for Hero Honda. However has risen for Bajaj and has

completely risen for TVS .

INTEREST COVERAGE RATIOS

1) Gross Profit Margin

Hero Honda 16.4 16.35 12.85 11.67 12.75

TVS 9.74 3.49 1.35 -1.53 0.49

Bajaj 14.37 12.09 10.32 11.06

The gross profit margin has overall reduced over the years for all the three

companies.

2) Net Profit Margin

Hero Honda 10.85 11.06 8.58 9.27 10.3

TVS 4.64 3.55 1.69 0.96 0.82

Bajaj 13.86 12.66 8.32 7.4

3) Return on Investment

Hero Honda 67.12 60.31 43.48 41.57 43.33

TVS 23.81 14.87 8.66 1.08 5.37

Bajaj 23.32 20.9 39.71 32.75

The return on investment of Hero Honda and bajaj is considerable high and good.

The ROI is drastically reducing is case of TVS.


18/27

18

EARNING PER SHARE

Hero Honda 40.59 48.64 42.96 48.47 64.19

TVS 5.79 4.93 2.8 1.34 1.35

Bajaj 108.87 122.35 52.25 45.37

One can clearly see how the earning per share of Hero Honda is better. It is increasing

because of the profits and equity of the company.

MARKET SHARE

Hero Honda 507 819.1 611 635.05 896

TVS 65 118.6 53 32.05 18.6

Bajaj 559.9 905 660.05 700 1075

P/E RATIO

Hero Honda 12.49076 16.84005 14.22253 13.10192 13.95856

TVS 11.22625 24.0568 18.92857 23.91791 13.77778

Bajaj 8.312666 5.394769 13.39713 23.69407

Bajaj has high price earning ratio as the market share of the company is good .The P/E ratio

of Hero Honda is on steady increase. In the case of TVS one can observe that trend does not

exist in the company. It has uneven Ratio in the years.

BOOK VALUE

Hero Honda 74.79 100.62 123.7 149.55 190.33

TVS 28.58 32.25 34.07 34.59 35.2

Bajaj 471.49 546.96 109.73 129.23


19/27

19

3 Fundamental Analysis

3.1 Economic Factors

Gross national product In FY 2006- 2007, Auto two wheeler Industry contributed

to 5% to the countrys GDP. As the GNP of the country develops the industry

benefits. In has been seen that the industry is affected directed with the trend in the

GNP. As the nation sees a positive GNP, the two auto wheeler also shows a positive

scenario. It is one of the key indicators of the progress of the industry.

Price level and inflation - The limited credit availability and the inflation factor

could prove to be decisive. If a country faces a situation of inflation then the industry

is immediately negatively affected as the major customers of the two wheeler industry

are the youth and lower and middle income groups who are immediately affected by

inflation.

Agriculture and monsoon Agriculture and monsoon is one of the main aspects

which affected every other industry in the country. The auto two wheeler industry is

immediately affected which is directly correlated with the trend and scenario of

agriculture and monsoon in the country.

Fiscal and monetary framework - Of late, cheaper petrol, comparatively lower

interest rates and the excise duty cut due to the stimulus packages have brought in

some relief for this disturbed industry.

Budget and its composition - . If the customs duty on steel, aluminium etc is raised,

then it will be negative for the auto industry in general

Magnitude of budget surplus/deficit With Budget surplus one can expect more

expenditure on infrastructure, there by better transport facilities and thus reducing

demand for auto two wheeler.

Level of internal and external debt -, the economic uncertainty in the market,

during this festive season, triggered the higher rates of interest and credit crunch,

thereby ceiling the sales.


20/27

20

CRR and SLR The CRR and SLR changes the interest rates. The change in the

interest rates affects the two wheeler customers immediately.

Money supply Inadequacy of retail finance is caused due to lack of adequate supply

of money in the market. Due to which the interest rates by banks are increased

affecting the consumers invariably.

Interest rate structure and credit policy - , interest rates are likely to decline, but

even then, the market conditions are not expected to get better before January 2010.

Natural calamity Any kind of natural calamity affects the sales and industry

negatively

Future projection of the economy - The Two-wheeler industry is known for its

inherent cyclical feature with 18 months of growth followed by 18 months of

degrowth.

Labour capital ratio With increasing technological up gradation, the labour capital

ratio has reduced.

Markup, profit margin and selling price. The selling price affects the industry in

general largely. As the price is one of the major determinants of the demand.

Advertising & promotional programme. With so much competition the

advertising and marketing strategies helps build the brand thereby helping the sales.

R&D expenses the life cycle of products getting shorter, the ability to offer new

models to meet fast changing customer preferences has become imperative. In this

context, the ability to deliver newer products calls for sound technological backing

and this has become one of the critical differentiating factor among companies in the

domestic market. Thus, the players have increased their focus on research and

development with some having indigenously developed new models as well as

improved technologies to cater to the domestic market.

On the two-wheeler industry front, since most manufacturers have a technology tie-up

with a foreign major, the incentive to do R&D with the Indian counterpart has

increased. For adopting new technologies companies need to invest high.


21/27

21

With major auto companies spending sizeable amount on product development and

in-house R&D expenditure in recent times, deduction of 150% on excise duty

exemption to the end consumers allowed on the same will encourage further R&D

investments.

Technology transfer to the Indian two-wheeler industry took place mainly through:

licensing and technical collaboration

Exports being one of the thrust areas for some Indian two-wheeler companies, the

Indian original equipment manufacturers (OEMs) have realised the need to upgrade

their technical capabilities. These relate to three main areas: fuel economy,

environmental compliance, and performance. In India, because of the cost-sensitive

nature of the market, fuel efficiency had been an interest area for manufacturers.


22/27


23/27

23

HEROHONDA

1,538.00 -34.75 (-2.21%)BSE : Oct 29, 10:58Open 1,555.00Vol 9,129High 1,575.0052 Wk 1,780.00Low 1,534.0052 Wk 734.00

1,539.45 -34.10 (-2.17%)NSE : Oct 29, 10:59Open 1,560.00Vol 59,331High 1,589.0052 Wk 1,774.70Low 1,535.0052 Wk 632.50

4.1 Bajaj Auto Limited


24/27

24

The graph covers period of two years of Bajaj Auto Company. The RSI has reached around

52% which is still high. The RSI shows that the company is reaching the overbought territory

and the stock is high. At this stage the stock prices are likely to fall. It is still high for a shortterm investor to invest in it. Initially till early months of 2009, the company was in oversold

territory. The recommendation is to hold the stock for sometime.As it is likely to rise with

recent steps taken by the company.


25/27

25

4.2 TVS Motor

The RSI is around 65% which is high. It is approaching the overbought area. The RSI is

moving with the Simple moving average and the volumes. The Bollinger graph shows the

area the stock of moving. This is time sell the stock as the prices are likely to fall in the near

future.

The RSI and simple moving average is moving with the volumes which is around 2.155

millions.


26/27

26

4.3 Hero Honda

The RSI is around 42% which is relatively low and shows that the stock is approaching the

oversold territory. This is the time one can invest in the company .The RSI is also in line with

The Simple moving average of the company. This is the perfect time to buy the stocks as the

prices are likely o rise and the prospects of the company are good.


27/27

Documents

Portfolio-sujay and Vaidehi