Automobile sector security analysis

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Automobile sector security analysis

  1. 1. SECURITY ANALYSIS OFAUTOMOBILE SECTOR
  2. 2. Economic Factor Affecting Automobile Sector• Pricing Pressure• Financing options• Income of the consumer / buyer• Efficient Operations• Wide Dealer Network
  3. 3. Economic Factor Affecting Automobile Sector• Access to Latest Technologies• Factor of production• Government policies and taxes• Presence across segments• Advertising and marketing
  4. 4. Risk In Automobile Sector• Labour unrest and industrial action.• Unexpected delays and cost overrun due to.• Slow down in government decision due to political instability.• Raw material price.• Restructuring of Automobile company• Financial - Allocation and cash flow Supply Chain• Operational Efficiency & Raw Material prices• Fuel Efficiency & Fuel Prices• segment Competitiveness & Emerging markets
  5. 5. COMPANY ANALYSIS
  6. 6. Maruti SuzukiBSE: 532500|NSE: MARUTI|BLOOMBERG: MSIL:INCMP: 1186.80| Target Price: 1250| Rating: BUY Market Cap (Mn INR) : 343,889.72 EPS (TTM):: 52.25Financial Statement INR Crore 52 Wk High/Low(Rs.):1428.50/905.50 Face Value: Rs.5 FY11 FY12 FY13ETotal Income 35,849 34,706 42,887Total Expenditure 32,980 33,074 40,528EBIDTA 2,869 1,632 2,359Depreciation 1,014 1,138 1,303EBIT 1,855 494 1,056Interest 25 55 86Other Income 1,278 1,708 1,606PBT 3,108 2,147 2,576TAX 820 511 644PAT 2,288 1,636 1,932EPS 15.9 22.58 66.87
  7. 7. VALUATION & INVESTMENT RECOMMENDATIONS• Manesar Plant reopens under full security of employees• MSIL to fast track its New alto launch which is priced about 2 lakhs• Suzuki making MSIL a small car manufacturing hub• Volume growth of 10.8% for FY2012• Company facing slowdown as the demand environment is impacted• Share in diesel vehicle is 38% during 1st quarter FY13•Net sales grew by 27.5% yoy to Rs.10,778cr in 1st quarter FY13• EPS Estimates to be INR 66.87 and ROE of 12.1% for FY2013• Expected significant volume growth of 15% for FY13• Coming up with new plant and Skill development center in Gujaratand R&D center in Haryana• Maintain BUY with long term perspective target price of INR 1250
  8. 8. Hero MotoCorpBSE: 500182|NSE: HEROMOTOCO|BLOOMBERG: HMCL:IN CMP: 1937| Target Price: 2125| Rating: BUYFinancial Snapshot Market Cap (Mn INR) : 386,595.00 INR Million FY11 FY12 FY13 P/E Ratio: 16.25Net Sales 1,92,450 2,33,681 2,61,940 EPS (TTM):119.0926Total Expenditure 1,67,980 1,99,700 2,24,313 Shares Outstanding (Mn): 199.69 Free Float (%): 47.79EBITDA 24,603 34,078 37,715 Dividend Yield (%): 2.32 52 Week High/ Low (Rs.): 2279/1704Depreciation 4,024 10,973 11,693EBIT 20,579 23,105 26,022Interest Cost -19 213 120Other Income 4,249 5,756 5,722PBT 24,048 28,647 31,624Tax 4,769 4,866 5,218PAT 19,279 23,781 26,406EPS 96.544644 119.09 132.235
  9. 9. VALUATION & INVESTMENT RECOMMENDATIONS• Capacity Expansion to more than 9 Mn units• R& D ramp up in terms of talent• International Tie-ups for Technology• Strong Exports momentum• Volume demand to moderate to 10 %• EPS Estimates to be INR 132/146 for FY13/FY14• Long term potential remains intact• Significant Volume growth• Margin expansion potential ahead• Maintain BUY with target price of INR 2,125
  10. 10. Tata Motors BSE: 500570|NSE: TATA MOTORS|BLOOMBERG: TTMT:IN CMP: 246| Target Price: 136| Rating: SELL Market Cap (Mn INR) : 726,039.38 Financial Snapshot P/E Ratio: 6.4595 INR Million FY11 FY12 FY13 FY14 FY15Net Sales EPS (TTM):42.5925 1,231,333 1,680,131 1,894,543 2,045,280 2,206,857 Shares Outstanding (Mn): 2,665.11Total Dividend Yield 5Y(%): 6.6Expenditure 1055783 1438196 1611786 1736241 1873404 52 Week High/ Low (Rs.):EBITDA 305.84/135.19 175,550 241,935 282,757 309,039 333,453Depreciation 56,180 70,807 74,530 80,450 86,806EBIT 119370 171128 208227 228589 246647Interest Cost 20,454 24,066 26,556 27,066 29,204OtherIncome 895 2,100 2,300 2,500 2,698PBT 99,810 149,162 183,971 204,023 220,141Tax 12,164 28,700 36,095 40,700 43,915PAT 87,646 120,462 147,876 163,323 176,226EPS 27.7 35.9 44.1 48.7 53
  11. 11. VALUATION & INVESTMENT RECOMMENDATIONS • Highest ever volumes growth 29.1% by Jaguar Land Rover •TML Drivelines Sales volumes increased on the back of growth in domestic CV market • Anticipated CAGR of 30.9% in truck market for 5year period 2010 –15 • Future products in pipeline for FY 12 including Variants from Prima range, World LCV range, ACE variants & Safari Storme • Strong operating cash flows in JLR and Capex ,Investment plans expected to be about GBP 2 bn in FY 13 • Extend export potential • EPS Estimates to be INR 44.1/48.7 for FY13/FY14 •Credit Suisse has downgraded Tata Motors based on poor financials •The CMP is Rs.246.00 against the valuation of Rs.135.37 • Tata Daewoo decreasing EBITDA and PAT margins • Increasing Debt ,which could reach to Rs.491,000 m in FY14-15 • Recommendation- Do Not Buy
  12. 12. Eicher Motors BSE: 505200|NSE: EICHERMOTEQ|BLOOMBERG: EIM:IN CMP: 2227| Target Price: 2125| Rating: HOLD Financial Snapshot INR Crores Market Cap (Cr. INR) : 58,94.313 FY11 FY12 FY13 P/E Ratio: 19.0704Total Income 5,726 6805 9251 EPS (TTM): 114.4812Total Expenditure 5,137 6106 8306 Shares Outstanding (Cr.): 2.7 Free Float (%): 44.8EBITDA 589 699 945 Dividend Yield (%): 0.71Depreciation 64 80 109 52 Week High/ Low(Rs.):2360.95/1306EBIT 525 619 835Interest Cost 8 7 9Other Income 142 166 176PBT 660 778 1003Tax 163 195 260PAT 309 314 513EPS 114 142.7 189.6
  13. 13. VALUATION & INVESTMENT RECOMMENDATIONS•Acquired 50 acres of land for construction of its new manufacturingfacility at Oragadam, Chennai, (Expected to commence in 1st half of2013).•The VEPT project, announced in 2010, is on track for scheduledcommencement of operations by end of 2012.•Recently signed a 50:50 Joint Venture with Polaris Industries Inc. toset up a greenfield project. Eicher Motors will invest Rs125cr.•EPS estimate comes to be around 189.6 for FY 13 •Enhance production capacity •Improve profitability •New product launches •Distribution and after market footprint •Maintain HOLD with target price of INR 2,125
  14. 14. Ashok Leyland BSE: 500477|NSE: ASHOKLEY |BLOOMBERG: AL:INFinancial Snapshot INR Million CMP: 21.85| Target Price: 41.27|Income Statement Y/e 2011 2012E 2013E Rating: BUYNet Revenue 1,11,177 1,30,996 1,60,675Raw Material Expenses 81,210 96,488 1,20,254gross profit 29,967 34,508 40,421 Market Cap (Mn INR) : 58,135.79employee cost 9,597 10,461 11,768 P/E Ratio: 10.27other expenses 8,192 10,459 12,796 EPS (TTM): 2.12EBITDA 12,178 13,589 15,856 Shares Outstanding (Mn): 2,660.68Depr. & Amortization 2,674 3,503 3,758 Dividend Yield (%) 5yr ng: 5.92Net Interest 1,636 2,307 2,570 52 Week High/ Low (Rs.): 30.57/20.0Other Income 151 90 250PBT 8,019 7,869 9,778Total Tax 1,705 1,495 1,858PAT 6,314 6,374 7,921Ex-Od items / Min. Int. -150Adjusted PAT 6,314 6,524 7,921Avg. Shares O/S (m) 2,660.70 2,660.70 2,660.70EPS (Rs.) 2.4 2.5 3
  15. 15. Ashok Leyland • One of the largest commercial vehicle manufacturers in India with a turnover of US $ 2.5 billion in 2011-12 • The largest supplier of logistics vehicles to the Indian Army • 2 facilities in Prague (Czech Republic) and Ras Al Khaimah (UAE). • 50:50 Joint Ventures (JV) with Nissan Motor Company (Japan) for Light Commercial Vehicles and John Deere (USA) for construction equipment • JV with Continental AG (Germany) is for developing automotive Infotronics •JV with the Alteams Group is for producing high press die casting aluminum components for both the automotive and Telecommunication sector
  16. 16. VALUATION & INVESTMENT RECOMMENDATIONS•Registered the highest growth of a 45 per cent CAGR over 2006-07 to 2011-12•Expected demand for buses growing by 8-10 per cent from 2011-12 to 2016-17•Expected CAGR of 17-20 per cent during 2010-11 to 2015-16 in SCV categorywhile 12-14 % in HCV category•While Total Industry Volume dipped 12% last year, its market share is up 4%•Proposed FDI in retail• EPS Estimates to be INR 3/3.5 for FY13/FY14•Operating margins for the next 2 years are expected to improve•Significant Sales growth• Maintain BUY with target price of INR 40.27
  17. 17. TVS MotorBSE: 532343|NSE: TVSMOTOR|BLOOMBERG: TVSL:IN CMP: 40| Target Price: 50| Rating: BUY Market Cap (Mn INR) : 19,193.52Financial Snapshot P/E Ratio: 14.58 INR Million FY 11 FY12 FY13 EPS (TTM): 2.77Total operating income 62891 75851 85496 Shares Outstanding (Mn): 475.09Total operating expenses 58963 70381 79576 Free Float (%): 40.69EBITDA 3928 5470 5921 Dividend Yield (%): 2.73Other income 113 23 23 52 Week High/ Low (Rs.): 70.30/31.8Depreciation 1073 1439 1469EBIT 2968 4054 4475Interest 470 461 461Recurring PBT 2498 3593 4014Net extra ordinary items -17 0 0PBT 2481 3593 4014Total taxes 535 886 1204PAT 1946 2708 2810EPS 4.09 5.69 5.9
  18. 18. VALUATION & INVESTMENT RECOMMENDATIONS Company has planned to launch a series of new product in FY13. The company expects to grow more than the industry expects(10%). Technology tie up with BMW may lead to increase in share prices. EPS estimates to be INR 5.9 for the FY13. Expected EPS for 2013 7  Market price has undervalued so 6 5.69 5.9 5 growth in share price can be expected 4 4.09  Volatility is in favor of share price. 3 Series1  Maintain BUY with target price of 2 1 INR 50. 0 FY 2011 FY 2012 FY 2013
  19. 19. ANALYSIS OF PRESENT-FUTURE OPPORTUNITIES• Unfavorable and volatile due to currency movements• Imported raw materials and components• Loss because of operating leverage• Dip in consensus points• Max growth expected
  20. 20. INVESTMENT OPPORTUNITIES
  21. 21. THANK YOURahul Hedau (73)Sujit Kumar Jha (76)Sneha Manocha (81)Shilpa Sharma (87)Rajesh Bhagat (109)Risabh Srivastava (110)Vinayak Chauhan (111)

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