Description
SECURITY ANALYSIS OF AUTOMOBILE SECTOR
SECURITY ANALYSIS OF AUTOMOBILE SECTOR
Economic Factor Affecting Automobile Sector
• Pricing Pressure • Financing options • Income of the consumer / buyer • Efficient Operations • Wide Dealer Network
Economic Factor Affecting Automobile Sector
• Access to Latest Technologies • Factor of production • Government policies and taxes • Presence across segments • Advertising and marketing
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
COMPANY ANALYSIS
Maruti Suzuki
BSE: 532500|NSE: MARUTI|BLOOMBERG: MSIL:IN
CMP: 1186.80| Target Price: 1250| Rating: BUY Financial Statement FY11 35,849 32,980 2,869
1,014 1,855 25 1,278 3,108 820
INR Crore
Market Cap (Mn INR) : 343,889.72 EPS (TTM):: 52.25 52 Wk High/Low(Rs.):1428.50/905.50 Face Value: Rs.5
Total Income Total Expenditure EBIDTA Depreciation EBIT Interest Other Income PBT TAX PAT EPS
FY12 34,706 33,074 1,632
1,138 494 55 1,708 2,147 511
FY13E 42,887 40,528 2,359
1,303 1,056 86 1,606 2,576 644
2,288 15.9
1,636 22.58
1,932 66.87
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 Gujarat and R&D center in Haryana • Maintain BUY with long term perspective target price of INR 1250
Hero MotoCorp
BSE: 500182|NSE: HEROMOTOCO|BLOOMBERG: HMCL:IN
CMP: 1937| Target Price: 2125| Rating: BUY Market Cap (Mn INR) : 386,595.00 P/E Ratio: 16.25 EPS (TTM):119.0926 Shares Outstanding (Mn): 199.69 Free Float (%): 47.79 Dividend Yield (%): 2.32 52 Week High/ Low (Rs.): 2279/1704
Financial Snapshot
Net Sales Total Expenditure FY11 1,92,450 1,67,980 FY12 2,33,681 1,99,700
INR Million
FY13 2,61,940 2,24,313
EBITDA Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS
24,603 4,024 20,579 -19 4,249 24,048 4,769 19,279 96.544644
34,078 10,973 23,105 213 5,756 28,647 4,866 23,781 119.09
37,715 11,693 26,022 120 5,722 31,624 5,218 26,406 132.235
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
Tata Motors
BSE: 500570|NSE: TATA MOTORS|BLOOMBERG: TTMT:IN
CMP: 246| Target Price: 136| Rating: SELL Market Cap (Mn INR) : 726,039.38 P/E Ratio: 6.4595 EPS (TTM):42.5925 Shares Outstanding (Mn): 2,665.11 Dividend Yield 5Y(%): 6.6 52 Week High/ Low (Rs.): 305.84/135.19
Financial Snapshot
FY11 Net Sales
1,231,333 1,680,131 1,894,543 2,045,280
FY12
FY13
FY14
INR Million
FY15
2,206,857
Total Expenditure
1055783 1438196 241,935 70,807 171128 24,066 2,100 149,162 28,700 120,462 35.9 1611786 282,757 74,530 208227 26,556 2,300 183,971 36,095 147,876 44.1 1736241 309,039 80,450 228589 27,066 2,500 204,023 40,700 163,323 48.7 1873404 333,453 86,806 246647 29,204 2,698 220,141 43,915 176,226 53
EBITDA
175,550
Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS
56,180 119370 20,454 895 99,810 12,164 87,646 27.7
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
Eicher Motors
BSE: 505200|NSE: EICHERMOTEQ|BLOOMBERG: EIM:IN
CMP: 2227| Target Price: 2125| Rating: HOLD Financial Snapshot
INR Crores
FY11 Total Income Total Expenditure EBITDA Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS 5,726 5,137 589 64 525 8 142 660 163 309 114 FY12 6805 6106 699 80 619 7 166 778 195 314 142.7 FY13 9251 8306 945 109 835 9 176 1003 260 513 189.6
Market Cap (Cr. INR) : 58,94.313 P/E Ratio: 19.0704 EPS (TTM): 114.4812 Shares Outstanding (Cr.): 2.7 Free Float (%): 44.8 Dividend Yield (%): 0.71 52 Week High/ Low(Rs.):2360.95/1306
VALUATION & INVESTMENT RECOMMENDATIONS
•Acquired 50 acres of land for construction of its new manufacturing facility at Oragadam, Chennai, (Expected to commence in 1st half of 2013). •The VEPT project, announced in 2010, is on track for scheduled commencement of operations by end of 2012. •Recently signed a 50:50 Joint Venture with Polaris Industries Inc. to set 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
Ashok Leyland
BSE: 500477|NSE: ASHOKLEY |BLOOMBERG: AL:IN
Financial Snapshot
Income Statement Y/e Net Revenue Raw Material Expenses gross profit employee cost other expenses EBITDA Depr. & Amortization Net Interest Other Income PBT Total Tax PAT Ex-Od items / Min. Int. Adjusted PAT Avg. Shares O/S (m) EPS (Rs.) INR Million 2011 2012E 2013E 1,11,177 1,30,996 1,60,675 81,210 96,488 1,20,254 29,967 34,508 40,421 9,597 10,461 11,768 8,192 10,459 12,796 12,178 13,589 15,856 2,674 3,503 3,758 1,636 2,307 2,570 151 90 250 8,019 7,869 9,778 1,705 1,495 1,858 6,314 6,374 7,921 -150 6,314 6,524 7,921 2,660.70 2,660.70 2,660.70 2.4 2.5 3
CMP: 21.85| Target Price: 41.27| Rating: BUY Market Cap (Mn INR) : 58,135.79 P/E Ratio: 10.27 EPS (TTM): 2.12 Shares Outstanding (Mn): 2,660.68 Dividend Yield (%) 5yr ng: 5.92 52 Week High/ Low (Rs.): 30.57/20.0
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
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 category while 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
TVS Motor
BSE: 532343|NSE: TVSMOTOR|BLOOMBERG: TVSL:IN
CMP: 40| Target Price: 50| Rating: BUY Market Cap (Mn INR) : 19,193.52 P/E Ratio: 14.58 EPS (TTM): 2.77 Shares Outstanding (Mn): 475.09 Free Float (%): 40.69 Dividend Yield (%): 2.73 52 Week High/ Low (Rs.): 70.30/31.8
Financial Snapshot
FY 11 Total operating income Total operating expenses EBITDA Other income Depreciation EBIT 62891 58963 3928 113 1073 2968 FY12 75851 70381 5470 23 1439 4054
INR Million
FY13 85496 79576 5921 23 1469 4475
Interest
Recurring PBT Net extra ordinary items PBT Total taxes PAT EPS
470
2498 -17 2481 535 1946 4.09
461
3593 0 3593 886 2708 5.69
461
4014 0 4014 1204 2810 5.9
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 growth in share price can be expected ? Volatility is in favor of share price. ? Maintain BUY with target price of INR 50.
6
5.69 4.09
5.9
5
4 3 2 1 0 FY 2011 FY 2012 FY 2013
Series1
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
INVESTMENT OPPORTUNITIES
THANK YOU
Rahul Hedau (73) Sujit Kumar Jha (76) Sneha Manocha (81) Shilpa Sharma (87) Rajesh Bhagat (109) Risabh Srivastava (110) Vinayak Chauhan (111)
doc_609644993.pptx
SECURITY ANALYSIS OF AUTOMOBILE SECTOR
SECURITY ANALYSIS OF AUTOMOBILE SECTOR
Economic Factor Affecting Automobile Sector
• Pricing Pressure • Financing options • Income of the consumer / buyer • Efficient Operations • Wide Dealer Network
Economic Factor Affecting Automobile Sector
• Access to Latest Technologies • Factor of production • Government policies and taxes • Presence across segments • Advertising and marketing
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
COMPANY ANALYSIS
Maruti Suzuki
BSE: 532500|NSE: MARUTI|BLOOMBERG: MSIL:IN
CMP: 1186.80| Target Price: 1250| Rating: BUY Financial Statement FY11 35,849 32,980 2,869
1,014 1,855 25 1,278 3,108 820
INR Crore
Market Cap (Mn INR) : 343,889.72 EPS (TTM):: 52.25 52 Wk High/Low(Rs.):1428.50/905.50 Face Value: Rs.5
Total Income Total Expenditure EBIDTA Depreciation EBIT Interest Other Income PBT TAX PAT EPS
FY12 34,706 33,074 1,632
1,138 494 55 1,708 2,147 511
FY13E 42,887 40,528 2,359
1,303 1,056 86 1,606 2,576 644
2,288 15.9
1,636 22.58
1,932 66.87
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 Gujarat and R&D center in Haryana • Maintain BUY with long term perspective target price of INR 1250
Hero MotoCorp
BSE: 500182|NSE: HEROMOTOCO|BLOOMBERG: HMCL:IN
CMP: 1937| Target Price: 2125| Rating: BUY Market Cap (Mn INR) : 386,595.00 P/E Ratio: 16.25 EPS (TTM):119.0926 Shares Outstanding (Mn): 199.69 Free Float (%): 47.79 Dividend Yield (%): 2.32 52 Week High/ Low (Rs.): 2279/1704
Financial Snapshot
Net Sales Total Expenditure FY11 1,92,450 1,67,980 FY12 2,33,681 1,99,700
INR Million
FY13 2,61,940 2,24,313
EBITDA Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS
24,603 4,024 20,579 -19 4,249 24,048 4,769 19,279 96.544644
34,078 10,973 23,105 213 5,756 28,647 4,866 23,781 119.09
37,715 11,693 26,022 120 5,722 31,624 5,218 26,406 132.235
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
Tata Motors
BSE: 500570|NSE: TATA MOTORS|BLOOMBERG: TTMT:IN
CMP: 246| Target Price: 136| Rating: SELL Market Cap (Mn INR) : 726,039.38 P/E Ratio: 6.4595 EPS (TTM):42.5925 Shares Outstanding (Mn): 2,665.11 Dividend Yield 5Y(%): 6.6 52 Week High/ Low (Rs.): 305.84/135.19
Financial Snapshot
FY11 Net Sales
1,231,333 1,680,131 1,894,543 2,045,280
FY12
FY13
FY14
INR Million
FY15
2,206,857
Total Expenditure
1055783 1438196 241,935 70,807 171128 24,066 2,100 149,162 28,700 120,462 35.9 1611786 282,757 74,530 208227 26,556 2,300 183,971 36,095 147,876 44.1 1736241 309,039 80,450 228589 27,066 2,500 204,023 40,700 163,323 48.7 1873404 333,453 86,806 246647 29,204 2,698 220,141 43,915 176,226 53
EBITDA
175,550
Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS
56,180 119370 20,454 895 99,810 12,164 87,646 27.7
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
Eicher Motors
BSE: 505200|NSE: EICHERMOTEQ|BLOOMBERG: EIM:IN
CMP: 2227| Target Price: 2125| Rating: HOLD Financial Snapshot
INR Crores
FY11 Total Income Total Expenditure EBITDA Depreciation EBIT Interest Cost Other Income PBT Tax PAT EPS 5,726 5,137 589 64 525 8 142 660 163 309 114 FY12 6805 6106 699 80 619 7 166 778 195 314 142.7 FY13 9251 8306 945 109 835 9 176 1003 260 513 189.6
Market Cap (Cr. INR) : 58,94.313 P/E Ratio: 19.0704 EPS (TTM): 114.4812 Shares Outstanding (Cr.): 2.7 Free Float (%): 44.8 Dividend Yield (%): 0.71 52 Week High/ Low(Rs.):2360.95/1306
VALUATION & INVESTMENT RECOMMENDATIONS
•Acquired 50 acres of land for construction of its new manufacturing facility at Oragadam, Chennai, (Expected to commence in 1st half of 2013). •The VEPT project, announced in 2010, is on track for scheduled commencement of operations by end of 2012. •Recently signed a 50:50 Joint Venture with Polaris Industries Inc. to set 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
Ashok Leyland
BSE: 500477|NSE: ASHOKLEY |BLOOMBERG: AL:IN
Financial Snapshot
Income Statement Y/e Net Revenue Raw Material Expenses gross profit employee cost other expenses EBITDA Depr. & Amortization Net Interest Other Income PBT Total Tax PAT Ex-Od items / Min. Int. Adjusted PAT Avg. Shares O/S (m) EPS (Rs.) INR Million 2011 2012E 2013E 1,11,177 1,30,996 1,60,675 81,210 96,488 1,20,254 29,967 34,508 40,421 9,597 10,461 11,768 8,192 10,459 12,796 12,178 13,589 15,856 2,674 3,503 3,758 1,636 2,307 2,570 151 90 250 8,019 7,869 9,778 1,705 1,495 1,858 6,314 6,374 7,921 -150 6,314 6,524 7,921 2,660.70 2,660.70 2,660.70 2.4 2.5 3
CMP: 21.85| Target Price: 41.27| Rating: BUY Market Cap (Mn INR) : 58,135.79 P/E Ratio: 10.27 EPS (TTM): 2.12 Shares Outstanding (Mn): 2,660.68 Dividend Yield (%) 5yr ng: 5.92 52 Week High/ Low (Rs.): 30.57/20.0
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
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 category while 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
TVS Motor
BSE: 532343|NSE: TVSMOTOR|BLOOMBERG: TVSL:IN
CMP: 40| Target Price: 50| Rating: BUY Market Cap (Mn INR) : 19,193.52 P/E Ratio: 14.58 EPS (TTM): 2.77 Shares Outstanding (Mn): 475.09 Free Float (%): 40.69 Dividend Yield (%): 2.73 52 Week High/ Low (Rs.): 70.30/31.8
Financial Snapshot
FY 11 Total operating income Total operating expenses EBITDA Other income Depreciation EBIT 62891 58963 3928 113 1073 2968 FY12 75851 70381 5470 23 1439 4054
INR Million
FY13 85496 79576 5921 23 1469 4475
Interest
Recurring PBT Net extra ordinary items PBT Total taxes PAT EPS
470
2498 -17 2481 535 1946 4.09
461
3593 0 3593 886 2708 5.69
461
4014 0 4014 1204 2810 5.9
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 growth in share price can be expected ? Volatility is in favor of share price. ? Maintain BUY with target price of INR 50.
6
5.69 4.09
5.9
5
4 3 2 1 0 FY 2011 FY 2012 FY 2013
Series1
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
INVESTMENT OPPORTUNITIES
THANK YOU
Rahul Hedau (73) Sujit Kumar Jha (76) Sneha Manocha (81) Shilpa Sharma (87) Rajesh Bhagat (109) Risabh Srivastava (110) Vinayak Chauhan (111)
doc_609644993.pptx