INTRODUCTION The automobile sector is the one of the core sectors, the Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub. So investment in the stocks of the automobile industry is one of the attractive options. Investing in shares of a company is highly rewarding at the same time it is highly risky. Moreover the Indian stock market is highly volatile with large volumes being traded. Analysis of stocks is highly helpful to reduce the risks and to make good money. This project is aimed at analyzing the Indian automobile industry in the view of its feasibility as an investment option. A detailed analysis of the Indian automobile industry is covered in respect of past growth performance. The fundamental analysis is done which analyzes the economy in the broader sense and the industry is analyzed using industry life cycle and SWOT analysis. Three companies namely Tata motors, Mahindra& Mahindra and Maruthi Suzuki are chosen and their financial and non financial information are analyzed. The technical analysis is also done for the stocks using some technical indicators. ` 1
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INTRODUCTION
The automobile sector is the one of the core sectors, the Indian automobile market is gearing towards
international standards to meet the needs of the global automobile giants and become a global hub.
So investment in the stocks of the automobile industry is one of the attractive options.
Investing in shares of a company is highly rewarding at the same time it is highly risky. Moreover
the Indian stock market is highly volatile with large volumes being traded. Analysis of stocks is
highly helpful to reduce the risks and to make good money.
This project is aimed at analyzing the Indian automobile industry in the view of its feasibility as an
investment option. A detailed analysis of the Indian automobile industry is covered in respect of past
growth performance. The fundamental analysis is done which analyzes the economy in the broader
sense and the industry is analyzed using industry life cycle and SWOT analysis.
Three companies namely Tata motors, Mahindra& Mahindra and Maruthi Suzuki are chosen and
their financial and non financial information are analyzed. The technical analysis is also done for the
stocks using some technical indicators.
Based on the analysis done the intrinsic value of the shares of the companies were found out and
their future pricing directors were determined.
Based on the analysis the future price directions are determined and recommendations are given to
make the project more meaningful.
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OBJECTIVES
Primary Objective
A comparative study of share price on automobile sector using fundamental valuation model taken at
angel Broking Company limited.
Secondary Objectives
Detailed analysis of Automobile industry which is gearing towards international standard
Fundamental analysis of automobile sector
Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and
Mahindra and Mahindra through fundamental analysis.
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NEED OF THE STUDY
The automobile industry is one of the core industries in India and is optimistic of posting good sales
in the coming years. So, the investment in shares and securities of automobile companies seems to
be profitable.
Investing is one of the most crucial decisions that every earning individual has to make at one point
of the time or the other. One of alluring options available is the investment in the shares and
securities of companies. The investment in share market is highly rewarding but highly risky.
The concept of analysis comes into the picture when decision has to be made on the choosing a
particular company’s shares for investment. A proper analysis helps in reducing the risks on
investment in the share markets less risky and highly rewarding.
This project is aimed at finding the analyzing the securities of select companies in the automobile
industries and to assist investment decisions.
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SCOPE OF THE STUDY
The scope of the study is identified after and during the study is conducted. The project is based on
tools like fundamental analysis and ratio analysis. Further, the study is based on information of last
five years.
The analysis is made by taking into consideration three companies i.e. TATA Motors,
Maruti Suzuki and Mahindra and Mahindra.
The scope of the study is limited for a period of five years.
The scope is limited to only the fundamental analysis of the chosen stocks.
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METHODOLOGY
Research design or research methodology is the procedure of collecting, analyzing and interpreting
the data to diagnose the problem and react to the opportunity in such a way where the costs can be
minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion.
The methodology used in the study for the completion of the project and the fulfillment of the
project objectives.
The sample of the stocks for the purpose of collecting secondary data has been selected on the basis
of Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosen
independent of the other stocks chosen. The stocks are chosen from the automobile sector.
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INDUSTRIAL PROFILE
OVERVIEW
The Indian retail brokerage industry consists of companies that primarily act as agents for the buying
and selling of securities (e.g. stocks, shares, and similar financial instruments) on a commission or
transaction fee basis.
It has two main interdependent segments: Primary market and the Secondary market.
Evolution of the Indian Brokerage Market
The Indian broking industry is one of the oldest trading industries that had been around even before
the establishment of the BSE in 1875. Despite passing through a number of changes in the post
liberalization period, the industry has found its way towards sustainable growth. The evolution of the
brokerage market is explained in three phases: pre1990, 1990-2000, post 2000.
Early Years
The equity brokerage industry in India is one of the oldest in the Asia region. India had an active
stock market for about 150 years that played a significant role in developing risk markets as also
promoting enterprise and supporting the growth of industry.
The roots of a stock market in India began in the 1860s during the American Civil War that led to a
sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock
companies that issued securities to raise finance. This trend was akin to the rapid growth of
securities markets in Europe and the North America in the background of expansion of railroads and
exploration of natural resources and land development.
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Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies
and 62 joint stock companies.
In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek
stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their
own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock
exchange in Jul 1875, which led to the formation of a trust in 1887 known as the “Native Share and
Stock Brokers Association”.
A unique feature of the stock market development in India was that that it was entirely driven by
local enterprise, unlike the banks which during the pre-independence period were owned and run by
the British. Following the establishment of the first stock exchange in Mumbai, other stock
exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908),
Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained
from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904
and 1908) etc, at different points of time.
Beginning of a new equity culture
A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign
Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational
companies, which created a surge in retail investing. The early 1980s witnessed another surge in
stock markets when major companies such as Reliance accessed equity markets for resource
mobilisation that evinced huge interest from retail investors.
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A new set of economic and financial sector reforms that began in the early 1990s gave further
impetus to the growth of the stock markets in India. As a part of the reform process, it became
imperative to strengthen the role of the capital markets that could play an important role in efficient
mobilisation and allocation of financial resources to the real economy. Towards this end, several
measures were taken to streamline the processes and systems including setting up an efficient market
infrastructure to enable Indian finance to grow further and mature. The importance of an efficient
micro market infrastructure came into focus following the incidence of market abuses in securities
and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint
Parliamentary Committees.
The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative
arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad
objectives of the SEBI include
to protect the interests of the investors in securities
to promote the development of securities markets and to regulate the securities markets
The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities
markets in India in the last fifteen years.
Following the recommendations of the High Powered Study Group on Establishment of New Stock
Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with
an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a
tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were
trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities
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Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segment
in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock
Exchange brought to Indian capital markets several innovations and modern practices and
procedures such as nationwide trading network, electronic trading, greater transparency in price
discovery and process driven operations that had significant bearing on further growth of the stock
markets in India.
Faster and efficient securities settlement system is an important ingredient of a successful stock
market. To speed the securities settlement process, The Depositories Act 1996 was passed that
allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of
securities through electronic book entry. The National Securities Depository Limited (NSDL) set up
by leading financial institutions, commenced operations in Oct 1996. Regulations governing
selection of various types of market intermediaries as depository participations were made.
Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchange
and other financial institutions came into being.
Indian Brokerage Industry
India in Global Markets
The stature and significance of India is growing in the world capital markets. India is not only
attracting greater interest from world markets, but is also assuming increasing importance in global
finance.
India is a major recipient of foreign institutional flows amongst the emerging markets. Since
the opening up of domestic stock markets to foreign investors, cumulative net FII
investments reached Rs 517 Bn by 2008 end.
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India is major destination of private equity flows into the emerging markets
India was host to the annual meetings/conference of the World Federation of Exchanges
(2005) and International Organization of Securities Commission (IOSCO) (2007)
India emerged a trillion dollar market capitalization market in 2007, and was among the top
10 stock exchanges in the world in terms of market capitalization
India is amongst the top fifteen stock exchanges in the world in respect of equity turnover
India emerged as a leading player in commodities futures market
India is amongst the top five in the number of transactions
India is among the top five in respect of volume traded in Stock Index Futures and Stock
Futures
India is one of the few markets with extensive dematerialisation of shares
India’s T+2 securities settlement cycle is at par with the global standards
Indian stock markets have the largest number of listings, with trading taking place in about
2,500-3,000 stocks
India’s most popular stock index (Sensex) is constructed on the basis of full float
methodology, one of the firsts in the Asian region and a global standard
Indian market indices such as Sensex and CNX Nifty are listed in foreign exchanges for
trading as ETFs.
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COMPANY PROFILE
Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has
emerged as one of the most respected Stock-Broking and Wealth Management Companies in India.
With its unique retail-focused stock trading business model, Angel is committed to providing ‘Real
Value for Money’ to all its clients.
The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange
(NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel is also
registered as a Depository Participant with CDSL.
Product Profile:
Online Trading
Commodities
DP Services
PMS (Portfolio Management Services)
Insurance
IPO Advisory
Mutual Fund
Personal loans
Quality Assurance
Online- Trading:
Specially designed for the net savvy traders and investors who prefer operating from their home or
office through the internet. The investor can access state of the art Technology with three different e-
broking products and voila trading on BSE, NSE, F &O, MCX and NCDEX.
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Commodities:
A commodity is a basic good representing a monetary value. Commodities are most often as inputs
in the production of other goods or services. With the advent of new online Exchange, commodities
can now be traded in futures markets. When they are traded on an Exchange, Commodities must also
meet specified minimum standards known as basic grade.
Types of Commodities
Precious Metals: Gold and Silver
Base Metals: Copper, Zinc, Steel and Aluminum
Energy: Crude Oil, Brent Crude and Natural Gas
Pluses: Chana, Urad and Tur
Spices: Black Pepper, Jeera, Turmeric, Red Chili
Others: Guar Complex, Soy Complex, Wheat and Sugar
IPO DISTRIBUTION AND ADVISORY:
✔ Wide network of branches for better customer reach
✔ Dedicated Research Teams generating sector related reports.
✔ Ease in investing with informed decision making.
✔ Advisory Help Desk for all IPO related queries.
Nature of Business
The Angel Group has emerged as one of the top 3 retail broking houses in India. Incorporated in
December 1997 in Mumbai, India, Angel Broking provides retail related services encompassing
Ebroking, Investment Advisory, Portfolio Management Services, Wealth Management Services and
Commodities Trading. It is a member of Bombay Stock Exchange and National Stock Exchange. It
is also a registered depository participant with CDSL.
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History & Milestones
Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has
emerged as one of the most respected Stock-Broking and Wealth Management Companies in India.
With its unique retail-focused stock trading business model, Angel is committed to providing ‘Real
Value for Money’ to all its clients. The Angel Group is a member of the Bombay Stock Exchange
(BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country:
NCDEX & MCX. Angel is also registered as a Depository Participant with CDSL.
Awarded with 'Broking House with Largest Distribution Network' and 'Best Retail Broking House'
at Dun & Bred street Equity Broking Awards 2009· August, 2008 Crossed 500000 trading accounts
● November, 2007 ‘Major Volume Driver’ for 2007
● December, 2006 Created 2500 business associates
● September, 2006 Launched Mutual Fund and IPO business
● July, 2006 launched the PMS function
● October, 2005 ‘Major Volume Driver’ award for 2005