auto & power industries portfolio analysis

8/3/2019 Auto & Power Industries Portfolio Analysis

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Security Analysis & Portfolio ManagementAutomobiles and Energy / Power Sector

Presenter:- ITM EEC Finance: Group No. - 4

Prameela Roll No: 07Rekha Roll No: 08Bhakti Roll No: 12Chetan Roll No: 20

Hemanta Roll No: 25


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Top Down Approach

Overall Industry Sectorwisepicture

Review of major players inthe respective Sector

Analysis of PromisingPlayers in that Sector

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Indian Economy Scenario India GDP Growth Rate slows to 6.9 percent in the third quarter

Average quarterly GDP Growth was 7.45 percent reaching an historical high of 11.80 percentin December of 2003 and a record low of 1.60 percent in December

Indian economy expanded at its slowest pace in more than two years in the July-Septemberquarter, hurt by high local borrowing costs and a deepening euro-zone crisis.

The growth in manufacturing output eased sharply to 2.7 percent from 7.2 percent in the

previous three months

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Indian Economy Scenario

Farm output rose 3.2 percent for the same period, down from theprevious quarter's 3.9 per cent growth

Economic activities relating to electricity, gas and water supplyincreased 9.8 percent, while the construction sector grew at an

improved rate of 4.3 percent

Investment climbed 30.5 percent from a year earlier, whileconsumer spending grew at a weaker pace of 59.5 percent.Government spending rose 10.7 percent, almost steady compared

to the prior quarter

Aggressive rate increases by the Reserve Bank of India over thepast 20 months to cool inflation have crimped industrial expansion,adding to pressure from a gloomy global economy that has hurt

demand for exports 4


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Challenges to Indian Economy

Cost

Innovation

Affordability

Demographics

&

Infrastructure

ExchangeRate

Taxes&

Duties

RawMaterial

Price

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Indian Automobile IndustryIndian Automobile Industry8


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Automobile Industry in India

Automotive industry in India is one of the largest in the worldand one of the fastest growing globally

India's passenger car and commercial vehicle manufacturingindustry is the seventh largest in the world

According to the Society of Indian Automobile Manufacturers,annual vehicle sales are projected to increase to 5 million by2015 and more than 9 million by 2020

By 2050, the country is expected to top the world in car volumes

with approximately 611 million vehicles on the nation's roads

The majority of India's car manufacturing industry is basedaround three clusters in the south, west and north

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Auto Industry Overview -India

Passenger Vehicles,16.25 , 16%

Commercial Vehicles,4.36 , 4%

Three Wheelers, 3.39 , 4%

Two Wheelers, 76.00 ,76%

Domestic Market Share for 2010-11

Industry9%

Household91%

Major Market Segmentation - Automobile

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Automobile Exports Sales Trends

2006-07 2007-08 2008-09 2009-10 2010-11

Passenger Vehicles 198,452 218,401 335,729 446,145 453,479

Commercial Vehicles 49,537 58,994 42,625 45,009 76,297

Three Wheelers 143,896 141,225 148,066 173,214 269,967

Two Wheelers 619,644 819,713 1,004,174 1,140,058 1,539,590

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

(Numberof

Vehicles

)

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Automobile Domestic Sales Trends

2006-07 2007-08 2008-09 2009-10 2010-11

Passenger Vehicles 1,379,979 1,549,882 1,552,703 1,951,333 2,520,421

Commercial Vehicles 467,765 490,494 384,194 532,721 676,408

Three Wheelers 403,910 364,781 349,727 440,392 526,022

Two Wheelers 7,872,334 7,249,278 7,437,619 9,370,951 11,790,305

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

(NumberofVehicles

)

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Automobile Sector in India- Growth Drivers

Emerged as Sunrise Sector after liberalization

Automotive Mission Plan 2006-2016 Vision

To emerge as the destination of choice in theworld for Design & Manufacturing of automobilesand auto components with output reaching a level ofUS$ 145 billion accounting for more than 10% of theGDP and providing additional employment to 25

million people by 2016

BRIC report says Indias per capita disposableincome will rise by 106% in 2015 from current year.

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Auto Industry Cost Analysis-India

Issues:

Fluctuations inmetal prices and

fuel prices, as wellas changes inlegislation andassistancepackages

FDI removingforeign currencyneutralization and

export obligations14


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Automobile Industry- Global

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Passenger vehicles in India

MarutiSuzuki India

46%

Tata Motors17%

HyundaiMotors India

14%

Others23%

Passenger VehiclesMarket

Share (%)

Maruti Suzuki India 46.07%

Tata Motors 16.45%

Hyundai Motors India 14.15%

Mahindra & Mahindra 6.50%

Honda Siel Cars India 4.44%

Toyota Kirloskar Motor 3.72%

Ford India 3.03%

General Motors 2.82%

Hindustan Motors 0.99%

Skoda Auto India 0.90%

Force Motors 0.62%

Fiat India Automobiles 0.16%

Diamler Chrysler 0.15%16


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Maruti Suzuki Maruti Suzuki India Limited

(NSE: MARUTI, SE: 532500) is asubsidiary company of Japaneseautomobile and motorcycle manufacturerSuzuki

The company offers a complete range ofcars

It was the first company in India tomass-produce and sell more than amillion cars.

It is largely credited for having brought

in an automobile revolution to India.

It is the market leader in India

The company's headquarters are locatedin New Delhi

Type Public

Traded as

BSE: 532500

NSE: MARUTI

Industry Automotive

Founded1981(as Maruti Udyog

Limited)

Headquarters New Delhi, India[1]

Products Automobiles

Revenue37,522.4 crore (US$7.61

billion) (2010-11)

Net income2,288.6 crore (US$464.13

million) (2010-11)

Employees 6,903

Parent Suzuki Motor Corporation17


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TATA Motors Tata Motors (NSE: TATAMOTORS,

BSE: 500570, NYSE: TTM) is anIndian multinational automotivecorporation headquartered in Mumbai,India

Is South Asias largest automobilecompany; it is the leader incommercial vehicles and among thetop three in passenger vehicles

Worldwide it is the world's fourth-largest truck manufacturer andsecond-largest bus manufacturer.

Tata Motors is a dual-listed companytraded on both the Bombay StockExchange and New York StockExchange

Type Public company

Traded as

NSE: TATAMOTORS

BSE: 500570

NYSE: TTM

Industry Automotive

Founded1945

Founder(s) JRD Tata

HeadquartersMumbai, Maharashtra,

India[1]

Area served Worldwide

ProductsAutomobiles

Automotive parts

ServicesVehicle leasing

Vehicle service

Revenue US$ 27.629 billion (2011)

Profit US$ 1.653 billion (2011)

Employees 53,151 (2011)

Parent Tata Group

Website www.tatamotors.com18


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Mahindra & Mahindra Mahindra & Mahindra Limited

(BSE: 500520) is the flagship companyof the Mahindra Group, a multinationalconglomerate based in Mumbai, India

Mahindra & Mahindra was set up as asteel trading company in 1945. The

company changed its name to Mahindra& Mahindra in 1948

It soon expanded into manufacturinggeneral-purpose utility vehicles,

starting with assembly under licence ofthe iconic Willys Jeep in India

They entered into the two-wheelersegment by taking over Kinetic Motorsin India.

Type Public

Traded asBSE: 500520

INE101A01026

Industry Automotive

Founded 1945

HeadquartersMumbai, Maharashtra,

India

Products Automobiles

Revenue 23,803.24 Rs crore (2011)

Net income 2,871.49 Rs crore (2010)

Employees 119,900

Parent Mahindra Group

Websitehttp://www.mahindra.com/19


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Automobiles Stock Highlights

As on 09-Dec-11(Amt. in Rs.)

Maruti suzuki Tata Motors Mahindra & Mahindra

BSE NSE BSE NSE BSE NSE

Current Price 985.70 985.80 182.95 183.00 703.75 703.25

Open Price 968.00 963.50 183.90 183.70 718.00 715.20

High Price 995.00 994.50 185.80 185.70 720.00 719.85

Low Price 956.45 956.35 180.70 180.10 698.00 697.20

Prev. Close 975.15 975.90 188.75 188.55 730.15 729.90

52 Wk High 1,454.90 1,454.80 274.40 274.90 874.75 877.30

52 wk Low 910.00 907.05 137.65 137.55 585.10 585.00

Volume 107,047.00 634,649.00 2,429,843.00 14,871,345.00 391,175.00 2,447,462.00

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Automobiles Ratio AnalysisParticulars Maruti Suzuki Tata Motors Mahindra & Mahindra

Market Share % 46.07 16.50 6.50ROCE 21.69 10.19 26.96

Valuation

Earnings Per Share 69.73 28.55 45.33

P/E 13.73 37.90 16.59

Dividend Payout Ratio Net Profit 11.00 80.96 30.15

Profitability

Gross Profit Margin(%) 6.37 6.97 12.89

Operating Profit Margin(%) 9.14 9.81 14.65

Net Profit Margin(%) 6.13 3.74 11.14

Solvency

Interest Cover 126.04 2.64 48.36

Debt Equity Ratio 0.02 0.80 0.23

Liquidity RatioCurrent Ratio 1.47 0.53 0.86

Quick Ratio 1.14 0.54 0.61

Activity Ratio

Inventory Turnover Ratio 33.33 13.86 15.64

Fixed Assets Turnover Ratio 3.13 2.22 4.08

Total Assets Turnover Ratio 2.59 1.35 1.8622


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Auto Industry- Comments & Analysis

Maruti Suzuki Invest

TATA Motors Hold

Mahindra & Mahindra - Buy

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Indian Energy / Power IndustryIndian Energy / Power Industry24


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Power / Energy Industry in India

The government aims to provide "power to all" by 2012. Toachieve that promise, it will have to add as much as 0.1million MW of generation capacity

Coal55%Hydro

26%

Gas

10%

Renewable5%

Nuclear3%

Diesel1%

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Power / Energy Industry in India Economic growth, capacity additions to fuel power demand

Country-wide deficit to reduce to 3.9 per cent by 2015-16

Investments of Rs 10.3 trillion expected over the next 5 years,margins to be under pressure

Equity returns are moderately attractive of power generationprojects

CRISIL Research expects a 18-20 percent y-o-y rise in Q3 2011-

12 net sales of power generation companies due to capacityadditions and higher fuel prices.

Operating margins of generation companies to decline to 24-26per cent due to lower PLFs

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Power / Energy Industry - Forecast The 11th 5 Year Plan will add 78,700 MW in 2007-2012 as

against 10,766 MW, only 6,250 MW (about 58%) was achievedby December 31 2009

Out of the 13 Ultra Mega Power Projects (UMPPs) envisaged upto 2017, the MoP has allocated 4 UMPPs till date

GoIs recently launched Jawaharlal Nehru National SolarMission aims to feed 20,000 MW of power to the national gridby 2022.

The main objective is to put India in solar energy Global Leader

map

Indias Electricity is set to see a huge boom as the 8-9%economic growth rates, plans to treble its capacity to 450 GWby 2020 from 160 GW

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NTPC (National Thermal Power Corporation)

NTPC Limited is the largest Indianstate-owned energy service providerbased in New Delhi, India. It wasfounded on November 7, 1975

It is listed in Forbes Global 2000 for2010 ranked it 341st in the world.

It is an Indian public sector companylisted on the Bombay Stock Exchangealthough at present the Governmentof India holds 84.5% of its equity.

NTPC has embarked on plans tobecome a 75,000 MW company by2017

As at 31 Mar 2011 NTPC's share ofthe country's total installed capacityis 17.75% and it generated 27.4% ofthe power generation of the countryin 201011

Type Public company

Traded as

BSE: 532555

NSE: NTPC

Industry Utilities (energy)

Founded 1975

Headquarters Delhi, India

Products

electrical power

natural gas

ServicesElectricity generation and

distribution

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NHPC (National Hydroelectric Power Corporation)

NHPC Limited (Formerly

National Hydroelectric PowerCorporation), A Govt. of IndiaEnterprise, was incorporated inthe year 1975

Later on NHPC expanded itsobjects to include other sourcesof energy like Geothermal, Tidal,Wind etc

NHPC is among the TOP TENcompanies in the country interms of investment.

Baira Suil Power station inSalooni Tehsil of Chamba wasthe first project undertaken byNHPC.

State-owned enterprise

Type Public company

Traded as 533098

NHPC

Industry Electric Utilities

Headquarters Faridabad, India

Website nhpcindia.com

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Lanco Infratech Lanco Infratech Limited is a

large Indian businessconglomerate involved inconstruction, power, real estate,and several other segments.

Founded in 1986 by the

politician Lagadapati Rajagopal

In March 2011, Lancocommissioned the Anpara-1 unitand became India's largestindependent power producerwith a generation capacity of 3.3GW, which overtakes TataPower's capacity of 3GW

Type Conglomerate

Traded

532778

LITL

Industry Infrastructure

Founded 1986

Founder(s) Rajagopal Lagadapati

Headquarters Gurgaon, NCR, India

Number of locations

pan-India presence,Australia, China, Indonesia,

London, Nepal, Singapore,United States of America

Employees Over 6500

Website www.lancogroup.com30


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Power / Energy Stock Highlights

As on 09-Dec-11(Amt. in Rs.)

NTPC NHPC Lanco Infratech

BSE NSE BSE NSE BSE NSE

Current Price 166.15 166.10 22.00 21.95 11.48 11.45

Open Price 164.00 163.25 22.05 22.05 11.90 11.75

High Price 167.90 167.80 22.20 22.15 11.90 11.90

Low Price 163.00 162.65 21.90 21.80 11.35 11.30

Prev. Close 166.35 166.30 22.15 22.15 11.94 11.95

52 Wk High 203.15 203.80 29.35 29.35 66.40 66.35

52 wk Low 152.00 152.05 21.90 21.80 11.35 11.30

Volume 118,609.00 1,953,522.00 645,334.00 3,033,803.00 1,842,092.00 8,121,805.0032


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Power / Energy Ratio Analysis

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Particulars NTPC NHPC Lanco Infratech

ROCE 11.32 6.75 10.47

Valuation

Earnings Per Share 11.04 1.76 1.17

P/E 13.51 10.41 11.30

Dividend Payout Ratio Net Profit 40.07 39.58 --

Profitability

Gross Profit Margin(%) 18.49 43.78 12.64

Operating Profit Margin(%) 23.01 65.48 13.86

Net Profit Margin(%) 15.85 43.92 4.70

Solvency

Interest Cover 10.65 5.38 2.24

Debt Equity Ratio 0.63 0.59 1.12

Liquidity Ratio

Current Ratio 2.59 0.93 1.14

Quick Ratio 2.32 0.93 1.05

Activity Ratio

Inventory Turnover Ratio 29.18 187.04 7.75

Fixed Assets Turnover Ratio 0.76 0.19 10.43

Total Assets Turnover Ratio 0.49 0.11 0.82


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Power / Energy - Comments & Analysis

NTPC Buy

NHPC Hold

Lanco Infratech - Hold

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Thank You..

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auto & power industries portfolio analysis

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