This document provides an analysis of the automobile sector in India, including key economic factors affecting it, risks, and details on several major automobile companies. It discusses factors like pricing pressure, financing options, consumer income, technology access, and government policies that influence the sector. Risks mentioned include labor issues, cost overruns, political instability, and raw material/fuel prices. Financial details and investment recommendations are provided for Maruti Suzuki, Hero MotoCorp, Tata Motors, Eicher Motors, Ashok Leyland, and TVS Motor. Opportunities in the growing sector are noted, but volatility from currency movements and imported costs are flagged as challenges.

1. SECURITY ANALYSIS OF
AUTOMOBILE SECTOR

2. Economic Factor Affecting Automobile
Sector
• Pricing Pressure
• Financing options
• Income of the consumer / buyer
• Efficient Operations
• Wide Dealer Network

3. Economic Factor Affecting Automobile
Sector
• Access to Latest Technologies
• Factor of production
• Government policies and taxes
• Presence across segments
• Advertising and marketing

4. 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

5. COMPANY ANALYSIS

6. Maruti Suzuki
BSE: 532500|NSE: MARUTI|BLOOMBERG: MSIL:IN
CMP: 1186.80| Target Price: 1250| Rating: BUY Market Cap (Mn INR) : 343,889.72
EPS (TTM):: 52.25
Financial Statement INR Crore
52 Wk High/Low(Rs.):1428.50/905.50
Face Value: Rs.5
FY11 FY12 FY13E
Total Income 35,849 34,706 42,887
Total Expenditure 32,980 33,074 40,528
EBIDTA 2,869 1,632 2,359
Depreciation 1,014 1,138 1,303
EBIT 1,855 494 1,056
Interest 25 55 86
Other Income 1,278 1,708 1,606
PBT 3,108 2,147 2,576
TAX 820 511 644
PAT 2,288 1,636 1,932
EPS 15.9 22.58 66.87

7. 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

8. Hero MotoCorp
BSE: 500182|NSE: HEROMOTOCO|BLOOMBERG: HMCL:IN
CMP: 1937| Target Price: 2125| Rating: BUY
Financial Snapshot Market Cap (Mn INR) : 386,595.00
INR Million
FY11 FY12 FY13 P/E Ratio: 16.25
Net Sales 1,92,450 2,33,681 2,61,940 EPS (TTM):119.0926
Total Expenditure 1,67,980 1,99,700 2,24,313 Shares Outstanding (Mn): 199.69
Free Float (%): 47.79
EBITDA 24,603 34,078 37,715
Dividend Yield (%): 2.32
52 Week High/ Low (Rs.): 2279/1704
Depreciation 4,024 10,973 11,693
EBIT 20,579 23,105 26,022
Interest Cost -19 213 120
Other Income 4,249 5,756 5,722
PBT 24,048 28,647 31,624
Tax 4,769 4,866 5,218
PAT 19,279 23,781 26,406
EPS 96.544644 119.09 132.235

9. 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

10. Tata Motors
BSE: 500570|NSE: TATA MOTORS|BLOOMBERG: TTMT:IN
CMP: 246| Target Price: 136| Rating: SELL
Market Cap (Mn INR) : 726,039.38
Financial Snapshot P/E Ratio: 6.4595
INR Million
FY11 FY12 FY13 FY14 FY15
Net Sales
EPS (TTM):42.5925
1,231,333 1,680,131 1,894,543 2,045,280 2,206,857 Shares Outstanding (Mn): 2,665.11
Total Dividend Yield 5Y(%): 6.6
Expenditure
1055783 1438196 1611786 1736241 1873404 52 Week High/ Low (Rs.):
EBITDA 305.84/135.19
175,550 241,935 282,757 309,039 333,453
Depreciation
56,180 70,807 74,530 80,450 86,806
EBIT 119370 171128 208227 228589 246647
Interest Cost
20,454 24,066 26,556 27,066 29,204
Other
Income 895 2,100 2,300 2,500 2,698
PBT 99,810 149,162 183,971 204,023 220,141
Tax 12,164 28,700 36,095 40,700 43,915
PAT 87,646 120,462 147,876 163,323 176,226
EPS 27.7 35.9 44.1 48.7 53

11. 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

12. Eicher Motors
BSE: 505200|NSE: EICHERMOTEQ|BLOOMBERG: EIM:IN
CMP: 2227| Target Price: 2125| Rating: HOLD
Financial Snapshot
INR Crores Market Cap (Cr. INR) : 58,94.313
FY11 FY12 FY13 P/E Ratio: 19.0704
Total Income 5,726 6805 9251 EPS (TTM): 114.4812
Total Expenditure 5,137 6106 8306
Shares Outstanding (Cr.): 2.7
Free Float (%): 44.8
EBITDA 589 699 945
Dividend Yield (%): 0.71
Depreciation 64 80 109
52 Week High/ Low(Rs.):2360.95/1306
EBIT 525 619 835
Interest Cost 8 7 9
Other Income 142 166 176
PBT 660 778 1003
Tax 163 195 260
PAT 309 314 513
EPS 114 142.7 189.6

13. 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

14. Ashok Leyland
BSE: 500477|NSE: ASHOKLEY |BLOOMBERG: AL:IN
Financial Snapshot INR Million CMP: 21.85| Target Price: 41.27|
Income Statement Y/e 2011 2012E 2013E Rating: BUY
Net Revenue 1,11,177 1,30,996 1,60,675
Raw Material Expenses 81,210 96,488 1,20,254
gross profit 29,967 34,508 40,421 Market Cap (Mn INR) : 58,135.79
employee cost 9,597 10,461 11,768 P/E Ratio: 10.27
other expenses 8,192 10,459 12,796 EPS (TTM): 2.12
EBITDA 12,178 13,589 15,856 Shares Outstanding (Mn): 2,660.68
Depr. & Amortization 2,674 3,503 3,758 Dividend Yield (%) 5yr ng: 5.92
Net Interest 1,636 2,307 2,570 52 Week High/ Low (Rs.): 30.57/20.0
Other Income 151 90 250
PBT 8,019 7,869 9,778
Total Tax 1,705 1,495 1,858
PAT 6,314 6,374 7,921
Ex-Od items / Min. Int. -150
Adjusted PAT 6,314 6,524 7,921
Avg. Shares O/S (m) 2,660.70 2,660.70 2,660.70
EPS (Rs.) 2.4 2.5 3

15. 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

16. 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

17. TVS Motor
BSE: 532343|NSE: TVSMOTOR|BLOOMBERG: TVSL:IN
CMP: 40| Target Price: 50| Rating: BUY
Market Cap (Mn INR) : 19,193.52
Financial Snapshot P/E Ratio: 14.58
INR Million
FY 11 FY12 FY13 EPS (TTM): 2.77
Total operating income 62891 75851 85496 Shares Outstanding (Mn): 475.09
Total operating expenses 58963 70381 79576 Free Float (%): 40.69
EBITDA 3928 5470 5921 Dividend Yield (%): 2.73
Other income 113 23 23 52 Week High/ Low (Rs.): 70.30/31.8
Depreciation 1073 1439 1469
EBIT 2968 4054 4475
Interest 470 461 461
Recurring PBT 2498 3593 4014
Net extra ordinary items -17 0 0
PBT 2481 3593 4014
Total taxes 535 886 1204
PAT 1946 2708 2810
EPS 4.09 5.69 5.9

18. 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 6
5.69 5.9
5
growth in share price can be expected 4 4.09
 Volatility is in favor of share price. 3 Series1
 Maintain BUY with target price of 2
1
INR 50.
0
FY 2011 FY 2012 FY 2013

19. 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

20. INVESTMENT OPPORTUNITIES

21. THANK YOU
Rahul Hedau (73)
Sujit Kumar Jha (76)
Sneha Manocha (81)
Shilpa Sharma (87)
Rajesh Bhagat (109)
Risabh Srivastava (110)
Vinayak Chauhan (111)