Fundamental Analysis of Automotive Industry
Fundamental analysis of sectors: Automotive industry
Namaskar dosto! Hello and welcome back to another insightful and fun fundamental analysis special podcast by Angel Broking. Aaj hum discuss karenge fundamental analysis of the auto sector. Aapko toh already pata hoga ki fundamental analysis mein, sector ke revenues, losses aur projections dekha jata hai.
Toh chaliye let's get our special stock market stethoscope on, and check the financial health of the automotive industry.
Existing growth in the sector:
According to the June 2021 report by FADA, which is the federation of automotive dealers' associations, automotive industry ne 22.6% growth sabit kiya. Yeh toh badiya hai! Right? But wait, this growth was still 28% lower than the last normal month of June which was in 2019.
Lekin baat yeh hai ki lockdown hone ke bawajood, growth toh hua hai, which is quite a big deal, hai nah?
Maybe it is a good idea to explore this growth further. Kaun kaun se automotive categories ne iss growth mein zyada contribution kiya hai, yeh jaanna zaroori hai so that we can eventually know which companies are likely to make better investments.
Trucks aur buses mein 236% ka growth hua hai
Cars aur SUVs mein 43% growth hua hai
Three wheelers… maane rickshe ka 22% growth in vehicle registration hua hai
Two wheelers aur tracters mein sirf 17% aur 14% ka growth hua hai.
Passenger vehicle sales increased to 184,134 units in June from 85,733 units in May.
Commercial vehicles mein 103% ka growth hua hai
Kaafi clear hai ki commercial vehicles mein growth sab se zyaada hai, lekin yeh bhi accept karna important hai ki this demand is 70% lower than "normal times"...
Incidentally, Maruti is the market leader in terms of sales volume during May 2021.
Projections in the short and long term :
Yeh growth aage maheeno mein bhi continue ho sakta hai as lockdowns are eased and dealerships are allowed to open their shutters. Cars demand badh gaya hai, kyunki abhi public transport milna mushkil bhi hai, according to the FADA president. Also logon ko abhi public transport risky bhi lagta hai which could mean higher demand for cars.
The Indian auto industry value is expected to touch Rupees 16 to 18 trillion over the next five years, that is by 2026.
Catalysts for growth:
Besides the easing of lockdowns that will contribute to improved performance of the auto sector, dusre bhi developments hai that can help the financial conditions of the auto sector.
Government ne kai saare initiatives liye hai:
Abhi 100% FDI allowed hai via automatic route. Sarkar ne ye allow kiya hai with the goal of raising the bar and increasing competition in the auto sector. Government ko chahiye ki india global hub bane particularly for small cars, two wheelers and tractors.
Ministry of road and highways ne March mahine mein vehicle scrapping policy introduce kiya tha. Goal yeh tha ki pollution kam ho jaye lekin iss policy se obviously naye vehicles ke liye demand bhi badh jayega. Sarkari press statement mein yeh bataya gaya hai ki there is an expectation of an additional 10000 crore worth investment in the auto sector, not to mention 35,000 new jobs. Kai investors ke liye factors like job generation are a consideration when investing, to maine yeh figure bhi include kiya.
Automotive retail ko medium and small scale enterprises mein include kiya gaya hai. Isse lower overheads ho sakte hai…more dealers could mean more buyers.
Abhi filhal auto sector ke liye production linked incentive scheme bhi aa gaya hai with a budget of Rs 57,000 crores.
Yeh toh naya khabar nahi hai lekin jaanna zaroori hai. Government ne 2019 mein phase 2 of FAME scheme for automotive sector start kiya. From 2019 to 2022, the government intends to spend about Rs 10,000 crore on creating demand for automotives in india.
Dusre bhi factors growth catalyst ban sakta hai
New normal mein it is likely that those who can afford to, will shun public transport. Family cars ka demand badh sakta hai
As people become more conscious of their carbon footprint and as more options become available people might add on electric vehicles to the cars they own.
Commercial vehicles mein demand bad sakta hai as people seem to be choosing domestic travel to drivable distances, especially at times when there are chances of fresh curbs
Which auto stocks are ripe for investment?
Angel Broking cannot tell you which stocks are good for you. Actually no random third party can give you such information. Your financial advisor can help you arrive at the possibly correct choice, lekin final decision apka hi rahega. Haan main batane wala hu lekin yeh too hamare top picks hai. Koi aapko stock price growth ka guarantee nahi de sakta aur agar kisi ne yeh guarantee de diya toh please be very suspicious. Stock market unpredictable hai. Chalo lekin maine angel broking ke top auto sector picks promise kiye tha toh here they are:
Dost yeh tha ek thorough picture of the automotive sector. If you are keen on investing, do consider your risk appetite, financial goals and investment horizon before going ahead and parking capital anywhere.
Jaane se pehle, ek baat yaad rakhiyega ke stock market investing mein risk hamesha rahega. This podcast has been made for educational purposes only and the investor must do his own research as well.
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