EXECUTIVE SUMMARY

These three companies are analyzed in terms of their market position, their financial situation, and their management strategy. Where useful, specific statistics have been incorporated into the analysis including: market share, return on equity, return on sales, revenues, net or the expenses, net income, market value added, number of brands, number of models, debt rating, and debt ratio. The examination of the industry as a whole and of some of the major players in the industry provides a good framework within which insightful conclusions can that can also be derived about the current state and future of the automotive industry. The Indian automobile industry is currently experiencing an unprecedented boom in demand for all types of vehicles. This boom has been triggered primarily by two factors: (1) increase in disposable incomes and standards of living of middle class Indian families estimated to be as many as four million in number; and (2) The Indian government's liberalization measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and banking liberalization that has fueled financing-driven purchases. Industry observers predict that passenger vehicle sales will triple in five years to about one million, and as the market grows and customer's purchasing abilities rise, there will be greater demand for higher-end models which currently constitute only a tiny fraction of the market. These trends have encouraged many multinational automakers from Japan, U. S. A., and Europe to enter the Indian market mainly through joint ventures with Indian firms. This paper presents an introduction to the key players in the Indian automotive industry, a summary of the recent developments, and an analysis of the opportunities and challenges facing the various players (Indian and multi-national assemblers and component makers) in the areas of product development, production, and distribution.

4.2

Limitations

This study has been conducted purely to understand Equity analysis for investors. The study is restricted to three companies based on Fundamental analysis. The study is limited to the companies having equities. Detailed study of the topic was not possible due to limited size of the project. There was a constraint with regard to time allocation for the research study i.e. for a period of 45 days. Suggestions and conclusions are based on the limited data of five years.

4.4

Conclusions

The Automobile industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009. In 2009, India emerged as Asias fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. T h e collapse in market place witnessed unprecedented turbulence in the w a k e o f global financial meltdown. A runaway inflation touching a high point of 12% early in the year, the tight monetary policies followed by the authorities for most of the year t o c o n t r o l i n f l a t i o n w i t h t h e c o n s e q u e n t h i g h i n t e r e s t r a t e s a n d w e a k c o n s u m e r demand, have collectively had a devastating effect on the automotive sector. Maruti Suzuki India LTD. company has a trend of growth from till 2008.During the financial year 2008-09 the there is downfall in the growth of the company. The main reason behind this downfall is because of the global recession. The downfall of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008.TATA Motors, which was trying to consolidate its leadership position in the market, also had to face the impact of global meltdown. Amid the crippling economic crisis,T a t a p u r c h a s e d B r i t a i n s J a g u a r L a n d R o v e r ( J L R ) f r o m F o r d M o t o r C o m p a n y . Acquiring JLR saddled Tata with some tough losses. Dividends and earnings remain low.

In spite of it being a tough year for all the companies across the globe and in India, Mahindra has given a satisfactory performance. At present its shares are under valued giving it a potential for growth. Global recession had a dampener effect on the growth of automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favoring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving.A c o n t i n u o u s e f f o r t a t c o s t c u t t i n g a n d i m p r o v i n g p r o d u c t i v i t y w i l l h e l p t h e companies in making reasonable profits despi t e t h e i m p a c t o f h i g h e r c o m m o d i t y prices and weaker rupee. The analysis gives an optimistic view about the industry and its g r o w t h w h i c h recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments.

4.5

Recommendations

By analyzing the automobile industry with the help of fundamental analysis, it has b e e n r e v e a l e d t h a t t h i s i n d u s t r y h a s a l o t o f p o t e n t i a l t o g r o w . So recommending investing in Automobile industry with no doubt is g o i n g t o b e a g o o d a n d s m a r t option because this industry is booming like never before not only in India but all over the world. The three giants of Indian Automobile industry viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra have outperformed in the industry. From the company analysis, we can know that Mahindra would be a better option for an investor compared to TATA and Maruti. In view of the slump in the domestic and international market, TATA has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from rs.15 in the previous year to rs.6 in2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor. T h e g l o b a l t u r m o i l i n f i n a n c i a l m a r k e t s h a s a f f e c t e d M a r u t i a l s o T h e company is maintaining a stable position. Its sales have grown over past five years. In spite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 21200 Crore to Rs 23381 Crore. As it is m a i n t a i n i n g a stable position, it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope of further rise in share prices. Despite the challenging business environment, Mahindra has maintained its upward sales level. Its Return on Investment is much higher c o m p a r e d t o TATA and Maruti. The dividend per share is rs.10 which is higher amongst the three companies. The company has potential to grow. It would be the best option for the investor. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from2008. Holding the shares for long time could be a wrong step and at this point of time those who invested earlier can book their profits. As Mahindras shares are undervalued, the investor can buy these shares. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment. Few Suggestions for Right Stock Selection There are three factors which an investor must consider for selecting the right stocks. Business An investor must look into what kind of business the company is doing, visibility of the business, its past track record, capital needs of the company for expansion etc.

Balance Sheet The investor must focus on its key financial ratios such as earnings per share, price-earnings ratio; debt-equity ratio, dividends per share etc and he must also check whether the company is generating cash flows. Bargaining This is the most important factor which shows the true worth of the company. An investor needs to choose valuation parameters which suit its business. Investment rules Invest for long term in equity markets Align your thought process with the business cycle of the company. Set the purpose for investment. Long term goals should be the objective of equity investment. Disciplined investment during market volatility helps attains profits. Planning, Knowledge and Discipline are very crucial for investment.