By : Chitra Darshini Deepak Faizal

The automobile industry in India is the ninth largest in the world with an annua l production of over 2.3 million units in 2008.[1] In 2009, India emerged as Asi a's fourth largest exporter of automobiles, behind Japan, South Korea and Thaila nd.[2]

India ranks 1st in the global two-wheeler market India is the 4th biggest commer cial vehicle market in the world India ranks 11th in the international passenger car market India ranks 5th pertaining to the number of bus and truck sold in th e world India is the second largest tractor manufacturer in the world.

Fundamental Analysis Technical Analysis

There is an intrinsic value of security. Which depends upon underlying economic (fundamental) factors. This intrinsic value can be determined by analyzing funda mental factors relating to Company, Industry and Economic. 3 steps of Fundamenta l Analysis Economy Analysis Industry Analysis Company Analysis

Economic analysis is the analysis of forces operating the overall economy a country. Econ omic analysis is a process whereby strengths and weaknesses of an economy are an alyzed. Economic analysis is important in order to understand exact condition of an economy.

Indiais 16thin the world in terms of nominal factory output The per capita Income is near about Rs38,000 more than 10 million people employed in this industry The market value of Automobile Industry is more than US$8 bl. and Contribution in I ndian GDP is near about 5%

India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and logging accounted for 16.6% of the GDP, employed 60% of the total workforce. Agro based economy Direct impact on industry Uncertainty of monsoon

In December 2008, overall production fell by 22 %. Passenger Vehicles segment re gistered negative growth. Total number of vehicles sold including passenger vehi cles, commercial vehicles, twowheelers and three-wheelers in 2008-09 was 9.72 mi llion as compared to 9.65 million in 2007-08.

The increase in the price of fuel and the steel due to inflation has led to a sl ower growth rate of the car industry in India. The effect of inflation has taken the rise in the price rate of the cars by 3-4% a fall of 8-9% in terms of turno ver.

Negative correlation Lower interest rates

In India FDI up to 100 percent, has been permitted under automatic route to this sector which has led to a turnover of USD 12 billion in the Indian auto industr y and USD 3 billion in the auto parts industry. manufacturing costs in India are 25 to 30 per cent lower than their western counterparts FDI inflows in Automobi le Industry 2008-09 was Rs.5,212 Cr an increase of 47.25% compare to 200708, whi le in April-May 2009 it was around Rs.497 Cr.

The Auto sector had a few pre-budget demands as they were going through a rough patch. The demands were: Adoption of a uniform excise structure for all passenge r and utility vehicles Reduction of excise duty on two and three wheelers Provis ion of benefits for hybrid technology Offer liberal credit to the agricultural s ector to enable purchase of tractors

The budget proposals for the Auto sector were: Excise duty on small cars reduced to 14 percent Excise cut on two and three wheelers to 12 percent Excise duty on bus es and chassis cut from 16 percent to 12 percent Excise duty on hybrid cars cut from 24 percent to 14percent Custom duty on steel removed

Possible Impact Reduction in excise duty of petrol driven trucks and its chassis is a positive sign for the commercial vehicle industry as it would the cost of the petrol driven trucks and thereby improving the sales. Retention of excise du ty for two wheelers and small cars may enable more sales. As service tax is impo sed on rail and waterways freight charges, there is a possibility of increase tr ansport of goods carried by roadways. Finally, the cut in the excise and customs duties would create good improvement for the automobile sector.

Society of Indian Automobile Manufacturers (SIAM), automobile sales (including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers) in the overseas markets increased to 1.53 million units in 2008-09 from 1.23 million units in 2 007-08. Export of passenger vehicles increased from 218,401 in 2007-08 to 335,73 9 units in 2008-09.

The current trends of the global automobile industry reveal that in the develope d countries the automobile industries are stagnating as a result of drooping mar kets, whereas the automobile industry in the developing nations, have been consi stently registering higher growth rates every passing year for their domestic fl ourishing domestic automobile markets

The automobile industry comprises of arts) Auto finance

4-wheelers

2-wheelers

Auto cmponents(auto p

Five Forces Model Industrial Life Cycle SWOT Analysis Industry Specific Index

Degree of Rivalry Despite the high concentration ratio seen in the automotive sector, r ivalry in the Indian auto sector is intense due to the entry of foreign companie s in the market. The industry rivalry is extremely high with any being product b eing matched in a few months by the competitors

Threat of Substitutes The threat of substitutes to the automotive industry is fairly mi ld. Numerous other forms of transportation are available, but none offer the uti lity, convenience, independence and value offered by automobiles

Barriers to entry The barriers to enter automotive industry are substantial. For a new co mpany, the startup capital required to establish manufacturing capacity to achie ve minimum efficient scale is prohibitive

Supplier's power

In the relationship between the industry and its suppliers, the power axis is ti pped in industry's favor. The industry is comprised of powerful buyers who are gen erally able to dictate their terms to the suppliers. Buyers' Power In the relations hip between the automotive industry and its ultimate consumers, the power axis i s tipped in the consumers'favor. This is due to the fairly standardized nature and the low switching costs associated with selecting from among competing brands.

The industrial life cycle is a term used for classifying industry vitality over time. Industry life cycle classification generally groups industries into one of four stages: Pioneering Growth Maturity Decline

In the growth phase, the product market has been established and there is at lea st some historical guide to ground demand estimates. The industry is growing rap idly, often at an accelerating rate of sales and earnings growth

A scan of the internal and external environment is an important part of the stra tegic planning process. Environmental factors internal to the firm usually can b e classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the s trategic environment is referred to as a SWOT analysis. SWOT analysis of the Ind ian automobile sector gives the following points:

Industry specific index also called as sectoral index are those indices, which r epresent a specific industry sector. All stocks in a sectoral index belong to th at sector only. Hence an index like the BSE auto index is made of auto stocks. S ectoral Indices are very useful in tracking the movement and performance of part icular sector

EPS measures the profit available to the equity shareholders per share, that is, the amount that they can get on every share held. = Net income- Dividends on Pr eferredstock Average Outstanding shares EPS

The trend shows that Tata's net profit margin is quite stable until it falls to 3.77 i n 2009. While the net profit of India's no.1 car manufacturer Maruti Suzuki shows a negative trend from 2007 onwards. But the future prospect for both the company's profit is higher. Profit margins come down as recession hits economy badly henc e sales get reduced and cost get increased very much. profit Ratio = (Net profit ) 100 (Net sales) Net

Both giants of Automobile industry shows positive trend in Sales Revenue over th e past 5year. However recession brought hurdles but both companies have potentia l to grow in future as lots of products are still to add in their portfolio. Mor eover increased demand in foreign market also seems to be a positive signal for better future.

 The quick ratio is a very stringent measure of solvency. A general rule of thumb suggests that the quick ratio should be around 1.

A high debt to equity ratio suggests that a company has financed its growth most ly via debt. Ratio= Total Debt Total Equity Debt-Equity

The current ratio is a convenient and reliable tool for measuring a company's level of liquidity. The ratio acts as an indication that the firm is able to generate funds to make all needed payments in the future; thus, the ratio indicates wheth er the firm is likely to be a going concern.

Tata motors and Maruti Suzuki both the companies showed a positive trend in paying di vidends till 2008, but the scenario changed in 2009 as both the company's dividend per share fell. According to graph TATA's dividend was much higher than that of M aruti, it always provided dividend of above 10 per share to its shareholders whi le maruti stick to below 5 per share, even though the fall in dividend in 2009, still both the companies are earning good profit. Dividend Per Share= Total amou nt of Dividend ShareOutstanding

Balance Sheets

Share Holding Pattern for Quarter Ended 30-June-09

Mr. Ratan Tata Mr. N.A. Soonawala Mr. R. Gopalakrishnan Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. S.M. Palia S. Bhargava V. K. Jairath Ravi Kant J. J. Irani N. N. Wad ia R.A. Mashelkar n Munjee Prakash M Telang Chairman Director Director Director Director Director Vice Chairman Director Dir ector Director Director Director

Mr. R. C. Bhargava Mr. Shinzo Hakanishi Mr. Manvinder Singh Banga Mr. Amal Gangu li Mr. D. S. Brar Mr. Keiichi Asai Mr. Osamu Suzuki Mr. Shuji Oishi Ms. Pallavi Shroff Mr. Kenichi Ayukawa Mr. Tsuneo Shashi Chairman MD and CEO Director Director Director Director Director Director Direct or Director Director & Managing Executive Office (Production)

Maruti Suzuki Products (CAR) Maruti Grand Vitara Diesel uti Cervo Maruti Kizashi Maruti xl7 Maruti APV Maruti 02 Maruti SX4 Diesel Maruti Jimny Mar

Expected Launch December- 2009 December 2009 December 2009 December 2009 Decembe r 2009 March 2010 June 2010 July 2010

Car

Tata

Tata

Tata

Tata

Expected launch indica vista IGNIS Sept 2009 indigo vista Sept 2009 indicruz Nov 2009 prima Aug 2010

Technical analysts track price movements and trading volumes in various securities to iden tify patterns in the price behavior of particular stocks, mutual funds, commodit ies, or options in specific market sectors or in the overall financial markets .

Accumulation Public participation Continuatio n Excess Upstrea m Correctio n

1. 2. 3. 4. 5. 6. The first tenet is that the market has three trends i.e.; Up trends Down trends Corrections The second tenet is that the trend have three phases i.e; Accumulati on Public participation Excess The third tenet is that the market counts all new s. The fourth is that the averages must confirm each other. The fifth tenet is t hat trends are confirmed by volume. The sixth tenet says that trends exist until definite signals prove that they have ended

Upstrea m Primary trend Deviation Reaction rally

SENSEX AND TATA MOTORS

This Technical tool helps in telling that what would be the price band of share price in which it move in near future on the basis of past high and low levels m ade by a particular scrip. Resistance Level shows the price above which share pr ice will not move in normal case on the other hand Support level shows the minim um share price which can be touched by share or crossing of this share will not be there in normal market condition

Resistance Level Rs.1425 approx. Support level RS.1275 approx.

Resistance Level Rs.490 approx. Support Level Rs.430 approx.

A Moving Average is an indicator that shows the average value of a security's pric e over a period of time.The method of interpreting a moving average is to compare the relationship between a moving average of the security's price with the secu rity's price itself.

A crossover occurs when a faster Moving Average crosses either above a slower Mo ving Average which is considered a bullish crossover or below which is considere d a bearish crossover. M.A.C helps in telling buying opportunities when the shor ter moving average crossesabovethe longer moving average and selling opportunities when the shorter moving average crossesbelowthe longer moving average.

20 Periods MA S B 50 Periods MA

Buy No Sell Position or Always Position of Buy