CHAPTER-1 INTRODUCTION

1.1 INTRODUCTION Equities are playing a major role in contribution of capital to the business from the beginning. Since the introduction of share concepts, large numbers of investors are showing interest to invest in stock market. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. The price of security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the securitys price to rise, he will buy it; if the investor expects the price fall, he will sell it. These simple statements are the causes of major challenges in forecasting security prices, because they refer to human expectations. As we all know firsthand, humans expectations are neither easily quantified nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. Thats not to say that knowing what security should sell for isnt important it is. But there is usually a fairly strong consensus of a stocks future earnings that the average investor cannot disprove. Fundamental analysis and technical analysis can co-exist in peace and complement each other. Since all investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis.

1.2 INDUSTRY PROFILE Automobile Industry The automobiles sector is divided into four segments two-wheelers (mopeds, scooters, motorcycles, electric two-wheelers), passenger vehicles (passenger cars, utility vehicles, multi-purpose vehicles), commercial vehicles (light and medium-heavy vehicles), and three wheelers (passenger carriers and good carriers). The industry is one of the key drivers of economic growth of the nation. Since the declining of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country. The world standings for the Indian automobile sector, as per the Confederation of Indian Industry, are as follows:

Largest three-wheeler market Second largest two-wheeler market Tenth largest passenger car market Fourth largest tractor market Fifth largest commercial vehicle market Fifth largest bus and truck segment

The auto sector reported a robust growth rate of 26 percent in the last two years (20102012). The BSE AUTO Index outperformed the benchmark Nifty by 79%, 12% and 19% in FY10, FY11 and FY12, respectively. FINANCIAL MARKETS Finance is the pre-requisite for modern business and financial institutions play a vital role in the economic system. Financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. They are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade. Generally, there is no specific place or location to indicate a financial market. Wherever a financial transaction takes place, it is deemed to have taken place in the financial market.
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Hence financial markets are pervasive in nature since financial transactions are themselves very pervasive throughout the economic system. For instance, issue of equity shares, granting of loan by term lending institutions, deposit of money into a bank, purchase of debentures, sale of shares and so on. In finance, financial markets facilitate:

The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) Price discovery Global transactions with integration of financial markets The transfer of liquidity (in the money markets) International trade (in the currency markets)

CLASSIFICATIONS OF FINANCIAL MARKET:

Capital Market The capital market is a market for financial assets which have a long or indefinite maturity. Generally, it deals with long term securities which have a period of above one year. In the widest sense, it consists of a series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities. As a whole, capital market facilitates rising of capital. Capital market consists of primary market and secondary market. Primary market: Primary market is a market for new issues or new financial claims. Hence it is also called as New Issue Market. It basically deals with those securities which are issued to the public for the first time. The market, therefore, makes available a new block of securities for public subscription. In other words, it deals with rising of fresh capital by companies either for cash or for consideration other than cash. The best example could be Initial Public Offering (IPO) where a firm offers shares to the public for the first time.

Secondary market: Secondary market is a market where existing securities are traded. In other words, securities which have already passed through new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities. This market consists of all stock exchanges recognized by the government of India. Money Market Money markets are the markets for short-term, highly liquid debt securities. Money market securities are generally very safe investments which return relatively low interest rate that is most appropriate for temporary cash storage or short term time needs. It consists of a number of sub-markets which collectively constitute the money market namely call money market, commercial bills market, acceptance market, and Treasury bill market. Derivatives Market: A derivative is a financial instrument, which derives its value from some other financial price. This other financial price is called the underlying. The underlying asset can be equity, FOREX, commodity or any other asset. Foreign Exchange Market It is a market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered to be the largest financial market in the world. It is a worldwide decentralized over-the-counter financial market for the trading of currencies. Because the currency markets are large and liquid, they are believed to be the most efficient financial markets. It is important to realize that the foreign exchange market is not a single exchange, but is constructed of a global network of computers that connects participants from all parts of the world. Commodities Market It is a physical or virtual marketplace for buying, selling and trading raw or primary products. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities. Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural
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resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc. STOCK EXCHANGE Indian capital markets have come a long way since the Asias oldest stock exchange in Mumbai came to existence in 1875. These were organized as voluntary non profit-making association of brokers to regulate and protect their interests. During the war boom, a number of stock exchanges were organized in Bombay, Ahmadabad and other centers, but they were not recognized. Soon after it become s central government issue, central legislation was proposed and a committee headed by A.D.Gorwala went into bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contracts (regulation) Act became law in 1956. As of April 1998 there were 23 stock exchanges recognized by the central government. Though there are 23 stock exchanges, Bombay stock exchange and national stock exchange are the two most significant stock exchanges in India. REGULATION OF STOCK EXCHANGES The securities contract (regulation) act is the basis for operation of the stock exchange in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence. SECURITIES AND EXCHNAGE BOARD OF INDIA (SEBI) SEBI was set up as an autonomous regulatory authority by the government of India in 1998 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for the matter connected therewith or incidental thereto. It is empowered by two accts namely the SEBI ACT, 1992 and the securities contract

(regulation) act, 1956 to perform the function of protecting investors rights and regulating the capital markets. Introduced many novel concepts to the Indian capital markets such as screen-based nationwide trading, sponsorship of companies, market making and scrip less trading. As a measure of success of these efforts, the Exchange today has 115 listings and has assisted in providing capital for enterprises that have gone on to build successful brands for themselves like VIP Advanta, Sonora Tiles & Brilliant mineral water, etc.

1.3 COMPANY PROFILE ABOUT SHRIRAM GROUP Established in the year 1974, the Shriram Group, comprising 750 Branches and Service Centre, is Indias premier financial services chain. It is the largest player in Truck Financing and Chit funds in the Indian subcontinents. The group, having an annual turnover of Rs.6000crores (USD 1.3 billion) has a significant presence in the Insurance consultancy, Consumer Durable Finance and Stock Broking businesses. It also has diversified information technology, pharmaceuticals, property development, project Engineering, packaging and Auto Components. They employ over 11,000 employees across the country that is committed to providing excellent customer service. They also have over 75,000 agents nationwide who reach out to our customers in even the most remote areas. ABOUT SHRIRAM INSIGHT Insight Share Brokers Ltd. Is stock-broking arm of the Rs.13,500 crore Shriram Group, a name to reckon with in the financial services sector for the past 3 decades and market leaders in truck finance business. With over 1000 braches, 12,000 employees, 50lakhs investors and a 80,000 strong agency force, Shriram has grown into a premier networked financial supermarket chain providing a host of services including stock-broking, distribution of investment products, risk management and insurance broking as well as consumer finance. Backed by this strong pedigree, Shriram Insight commenced stock broking operations in 1999 and presently services around 1, 00,000 customers through over 300 online trading
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centers spanned across the country. A Corporate Trading Member of the National Stock Exchange (SEBI Registration No.INB/INF 230947033) in both the equities and Derivatives segment and the stock Exchange, Mumbai (SEBI Registration no.INB 010947035) in the cash segment. The Company is also registered as a member of the Multi-/commodity Exchange (MCX) as well as a Depository participant with Central Depository Services Ltd. JOURNEY Incorporated in 1995, Shri ram Insight Share Brokers Ltd, was promoted by professional entrepreneurs and incubate by Shriram group Shriram insight commenced operations with corporate membership on NSE in cash segment in 1996 Membership in derivatives segment on NSE acquired in 2003 Currently registered member of NSE & BSE for equities & derivatives and CDSL for depository. VISION, MISSION AND VALUES Helping create wealth Empowering people through prosperity Putting people first

Efficiency in operations, integrity and a strong focus on catering to the needs of the common man, by offering him high quality and cost-effective products and services, are the values driving the organization. These core values are deep-rooted within the organization and have been strongly adhered to over the decades. SERVICES AND RECOGNITION Shriram Insight services more than 1, 25,000 clients through its network of 460 branches spread across the country. Our offerings include: Share trading Call & Trade Online (Internet) Trading with highly secured payment gateways through leading banks in India. Trading & D-mat account at nominal cost
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 Trading in cash & derivatives Commodities trading PRODUCT PORTFOLIO OF SHRIRAM INSIGHT Initial Public Offering IPO Derivative Insurance Equity Mutual Fund Commodities

CHAPTER-2 REVIEW OF LITERATURE

2.1 REVIEW OF LITERATURE SECURITY ANALYSIS Investment success is pretty much a matter of careful selection and timing of stock purchases coupled with perfect matching to an individuals risk tolerance. In order to carry out selection, timing and matching actions an investor must conduct deep security analysis. Investors purchase equity shares with two basic objectives: 1. To make capital profits by selling shares at higher prices. 2. To earn dividend income. These two factors are affected by a host of factors. An investor has to carefully understand and analyze all these factors. There are basically two approaches to study security prices and valuation i.e. fundamental analysis and technical analysis The value of common stock is determined in large measure by the performance of the firm that issued the stock. If the company is healthy and can demonstrate strength and growth, the value of the stock will increase. When values increase then prices follow and returns on an investment will increase. However, just to keep the savvy investor on their toes, the mix is complicated by the risk factors involved. Fundamental analysis examines all the dimensions of risk exposure and the probabilities of return, and merges them with broader economic analysis and greater industry analysis to formulate the valuation of a stock. FUNDAMENTAL ANALYSIS Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It is the study of economic, industry and company conditions in an effort to determine the value of a companys stock. Fundamental analysis typically focuses on key statistics in companys financial statements to determine if the stock price is correctly valued.

This approach attempts to study the economic scenario, industry position and the company expectations and is also known as Economic-Industry-Company approach (EIC approach). OBJECTIVES OF FUNDAMENTAL ANALYSIS Fundamental analysis is performed on historical and present data, but with the goals of making financial forecasts. There are several possible objectives. To conduct a company stock valuation and predict its probable price evolution; To make a projection on its business performance; To evaluate its management and make internal business decisions; To calculate its credit risk; It also makes internal business decisions. FUNDAMENTAL FRAMEWORK Under this fundamental framework following three types of analysis is undertaken:
Fundamental Analysis

Economy GDP Growth Rate Inflation rate Money supply Growth, etc.

Industry Capacity Installed Utilized Market position Govt policy

Company Financial Non-financial

Economic Analysis: The analyst considers the economic environment, which may give indication of the future direction of security prices. Example, rising inflation and interest rates argue that security prices should tend to fall.

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Industry Analysis: The analyst considers the industry, since industries react differently to changes in the economic environment. The demand for durable items, such as cars, major appliance and housing, trends to respond to change in the level of economic activity, while the demand for other products, such as necessities(e.g., food) and some consumer goods, trends to be less responsive to changes in economic activity Company Analysis: After considering the economy and the industry, the analyst considers the individual firm, since what applies to economy or the industry may not apply to a specific firm. Some firms do poorly even when the general economy prospers.

Details about fundamental analysis: 1. ECONOMIC ANALYSIS: The level of economic activity has an impact on investment in many ways. If the economy grows rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macroeconomic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows: Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy. It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market.

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Inflation: Along with the growth of GDP, if the inflation rate also increases, then the real growth would be very little. The effects of inflation on capital markets are numerous. An increase in the expected rate of inflation is expected to cause a nominal rise in interest rates. Also, it increases uncertainty of future business and investment decisions. As inflation increases, it results in extra costs to businesses, thereby squeezing their profit margins and leading to real declines in profitability. Interest rates: The interest rate affects the cost of financing to the firms. A decrease in interest rate implies lower cost of finance for firms and more profitability. More money is available at a lower interest rate for the brokers who are doing business with borrowed money. Availability of cheap funds encourages speculation and rise in the price of shares. Tax structure: Every year in March, the business community eagerly awaits the Governments announcement regarding the tax policy. Concessions and incentives given to a certain industry encourage investment in that particular industry. Tax reliefs given to savings encourage savings. The type of tax exemption has impact on the profitability of the industries. 2. INDUSTRY ANALYSIS: An industry is a group of firms that have similar technological structure of production and produce similar products and Industry analysis is a type of business research that focuses on the status of an industry or an industrial sector (a broad industry classification, like "manufacturing"). Irrespective of specific economic situations, some industries might be expected to perform better, and share prices in these industries may not decline as much as in other industries. This identification of economic and industry specific factors influencing share prices will help investors to identify the shares that fit individual expectations Industry Life Cycle: The industry life cycle theory is generally attributed to Julius Grodinsky. The life cycle of the industry is separated into four well defined stages. Pioneering stage: This stage characterized by introduction of a new product and an uptrend in business cycle which encourage new product introductions.

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Rapid growth stage: This is characterized by the hectic activity of firm surviving from the recovery stage. After overcoming the teething problem the firms continue to improve financially and competitively.

Maturity and stabilization stage: This stage shows sign of slow progress and also prospect of decay. Decline stage: industry reaches this stage when it fails to detect the death signals and implement proactively or reactively appropriate strategies. Thus leads to decline in profit dividend and share prices.

SWOT analysis: SWOT analysis represents the strength, weakness, opportunity and threat for an industry. Every investor should carry out a SWOT analysis for the chosen industry. Take for instance, increase in demand for the industrys product becomes its strength, presence of numerous players in the market, i.e. competition becomes the threat to a particular company. The progress in R & D in that industry is an opportunity and entry of multinationals in the industry is a threat. In this way the factors are to be arranged and analyzed. Strengths Threats Weakness Opportunities

Strengths

Threats

SWOT ANALYSI S Opportunities

Weakness

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3. COMPANY ANALYSIS In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present and future values of the stock. The risk and return associated with the purchase of the stock is analyzed to take better investment decisions. The present and future values are affected by a number of factors. Financial analysis: The best source of financial information about a company is its own financial statements. Financial statement analysis is the study of a companys financial statement from various viewpoints. The statement gives the historical and current information about the companys operations. Historical financial statement helps to predict the future and the current information aids to analyze the present status of the company. The two main statements used in the analysis are Balance sheet and Profit and Loss Account. Ratio analysis: Ratio is a relationship between two figures expressed mathematically. . Financial ratios are calculated from the balance sheet and profit and loss account. The relationship can be either expressed as a percent or as a quotient. Ratios summarize the data for easy understanding, comparison and interpretations. Ratios for investment purposes can be classified into profitability ratios, turnover ratios, and leverage ratios. Profitability ratios are the most popular ratios since investors prefer to measure the present profit performance and use this information to forecast the future strength of the company. The most often used profitability ratios are return on assets, price earnings multiplier, price to book value, price to cash flow, and price to sales, dividend yield, return on equity, present value of cash flows, and profit margins. a) Return on Investment (ROI): ROI is the return on capital invested in business, i.e., if an investment Rs 1 crore in men, machines, land and material is made to generate Rs. 25 lakhs of net profit, then the ROI is 25%. The computation of return on investment is as follows: Return on Investment (ROI) = (Net profit/Equity investments) x 100

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As this ratio reveals how well the resources of a firm are being used, higher the ratio, better are the results. The return on shareholders investment should be compared with the return of other similar firms in the same industry. The inert-firm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher. b) Dividend Payout Ratio: From the profits of each company a cash flow called dividend is distributed among its shareholders. The return to the shareholders, in the form of dividend, out of the company's profit is measured through the payout ratio. The payout ratio is computed as follows: Payout Ratio = (Dividend per share / Earnings per share) * 100 The percentage of payout ratio can also be used to compute the percentage of retained earnings. The profits available for distribution are either paid as dividends or retained internally for business growth opportunities. Hence, when dividends are not declared, the entire profit is ploughed back into the business for its future investments. c) Dividend Yield: Dividend yield is computed by relating the dividend per share to the market price of the share. The market place provides opportunities for the investor to buy the company's share at any point of time. The price at which the share has been bought from the market is the actual cost of the investment to the shareholder. The market price is to be taken as the cum-dividend price. Dividend yield relates the actual cost to the cash flows received from the company. The computation of dividend yield is as follows Dividend yield = (Dividend per share / Market price per share) * 100 High dividend yield ratios are usually interpreted as undervalued companies in the market. The market price is a measure of future discounted values, while the dividend per share is the present return from the investment. Hence, a high dividend yield implies that the share has been under priced in the market. On the other hand a low dividend yield need not be interpreted as overvaluation of shares. d) Price/Earnings Ratio (P/E): The P/E multiplier or the price earnings ratio relates the current market price of the share to the earnings per share.

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This is computed as follows: Price/earnings ratio = Current market price / Earnings per share This ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Many investors prefer to buy the company's shares at a low P/E ratio since the general interpretation is that the market is undervaluing the share and there will be a correction in the market price sooner or later. A very high P/E ratio on the other hand implies that the company's shares are overvalued and the investor can benefit by selling the shares at this high market price. e) Net profit margin: The ratio is designed to focus attention on the net profit margin arising from business operations before interest and tax is deducted. The convention is to express profit after tax and interest as a percentage of sales. Net profit margin= (Net profit before interest and tax / Sales) x 100 This ratio reflects net profit margin on the total sales, after deducting all expenses but before deducting interest and taxation. This ratio measures the efficiency of operation of the company. The net profit is arrived at from gross profit after deducting administration, selling and distribution expenses. The non-operating incomes and expenses are ignored in computation of net profit before tax, depreciation and interest. This measure will depict the correct trend of performance where there are erratic fluctuations in the tax provisions from year to year. f) Operating Profit Ratio: Operating profit ratio explains the operating efficiency of the firm and is a measure of the managements efficiency in running the routine business operation of the firm. Here operating profit ratio is: Operating profit ratio = Gross profit Operating expenses Operating profit ratio = (Operating Profit / Net Sales) x 100 Operating expenses includes cost of goods sold, administrative expenses, and selling expenses and excluding of finance expenses. Net sales mean sales sales returns.

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g) Earnings Yield: The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company. Earnings Yield= (EPS / MPS) x100 The earnings yield is used by many investment managers to determine optimal asset allocations. h) Return on Shareholders Funds: This ratio expresses the net profit in terms of the equity shareholders funds. This ratio is an important yardstick of performance foe equity shareholders since it indicates the return on the funds employed by them. However, this measure is based on the historical net worth and will for old plants and low for new plants. Return on shareholder fund= (net profit after tax and interest / shareholder fund) i) Earnings per Share (EPS): This ratio determines what the company is earning for every share. For many investors, earnings are the most important tool. EPS is calculated by dividing the earnings (net profit) by the total number of equity shares. The computation of EPS is as follows: Earnings per share = Net profit/Number of shares outstanding The EPS is a good measure of profitability and when compared with EPS of similar other companies, it gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earning power of the company has increased. j) Dividend per Share (DPS): The extent of payment of dividend to the shareholders is measured in the form of dividend per share. The dividend per share gives the amount of cash flow from the company to the owners and is calculated as follows: Dividend per share = Total dividend payment / Number of shares outstanding The payment of dividend can have several interpretations to the shareholder. The distribution of dividend could be thought of as the distribution of excess profits/abnormal profits by the company. On the other hand, it could also be negatively interpreted as lack of investment opportunities. In all, dividend payout gives the extent of inflows to the shareholders from the company.
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CHAPTER - 3 RESEARCH METHODOLOGY

3.1 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 sample of the stocks has been collected using secondary data. 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. The sample size for the number of stocks is taken as 3 for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study. 3.2 NEED OF THE STUDY To start any business capital plays major role. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. The owners of the company have to pay regular interest and principal amount at the end. Stock is ownership in a company, with each share of stock representing a tiny piece of ownership. The more shares you own, the more of the company you own. The more shares you own, the more dividends you earn when the company makes a profit. In the financial world, ownership is called Equity. Stock/shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. The more shares you own the more dividends you receive. The role of fundamental analysis is to provide information to the market. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued). This is valuable because it fills information gaps so that each individual investor does not need to analyze every stock thereby making the markets more efficient.

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3.3 OBJECTIVES OF THE STUDY The main objectives of the Project study are: Detailed analysis of Automobile industry Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and Mahindra and Mahindra through ratios. 3.4 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 five 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.

3.5 LIMITATIONS OF THE STUDY The study is restricted to three companies based on Fundamental analysis. 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.

CHAPTER - 4 DATA ANALYSIS & INTERPRETATIONS

4.1 ANALYSIS OF AUTOMOBILE INDUSTRY Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports
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business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. To understand this industry for the purpose of investment we need to analyze it by the following approach: Fundamental Analysis (E.I.C Approach) a. Economy analysis b. Industry analysis c. Company analysis FUNDAMENTAL ANALYSIS: Fundamental analysis is the study of economic, industry and company conditions in an effort to determine the value of a company s stock. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. Most fundamental information focuses on economic, industry and company statistics. The typical approach to analyzing a company involves three basic steps: 1. Determine the condition of the general economy. 2. Determine the condition of the industry. 3. Determine the condition of the company. 4.4.1 ECONOMY ANALYSIS Economic analysis is the analysis of forces operating the overall economy a country. Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. Economic analysis is important in order to understand exact condition of an economy.

GDP In absolute terms, India is 16th in the world in terms of nominal factory output. The service sector is growing rapidly in the past few years. This is the chart showing contributions of GDP growth rate TABLE 4.1.1
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GDP YEAR GDP 2008 9.7 2009 6.1 2010 7.3 2011 8.3 2012 6.6

CHART 4.1.1

GDP
12 10 8 6 4 2 0 2008 2009 2010 2011 2012 6.1 9.7 8.3 7.3 6.6 Series 1

As the world economy slipped into recession hitting the demand hard, the GDP had a high growth in 2008 and it has downgraded in 2009.GDP has increased to7.1 in 2010 by overcoming the setbacks of recession. After 2010 GDP rates suddenly increases to 8.3 in 2011.now present percent is 6.3% in 2010-2012. The slowing Indian economy reflected in the reduced industrial output and GDP does not augur well for the automobile industry. INTEREST RATE: TABLE 4.1.2 INTEREST RATE YEAR INTEREST 2008 7 2009 4.5 2010 4.5 2011 6.8 2012 8

CHART 4.1.2

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INTEREST RATE
9 8 7 6 5 4 3 2 1 0 2008 2009 2010 YEARS 2011 2012

PERCENTAGE

YEILD CURVE

The benchmark interest rate in India was latest reported at 8.00 percent. Historically, from 2000 until 2012, India Interest Rate averaged 6.52 Percent reaching an all time high of 14.50 Percent in August of 2000 and a record low of 4.25 Percent in April of 2009.percentage reaches in between 2010-2012 percentages goes to 6.8 after that 2012 slowly increases to 8 percent. In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. A higher interest rate will depress the automobile industry while a lower interest rate would help the industry grow. With interest rate expected to fall, automobile sales are expected to rise. INFLATION: Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quality. There are, therefore, many measures of inflation depending on the specific circumstances. The most well known are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. The effect of inflation has affected every sector which is related to car manufacturing and production. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India. TABLE 4.1.3 INFLATION

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YEAR INFLATION

2008 5.6

2009 3.61

2010 9.65

2011 9.54

2012 7.56

The inflation rate in India was recorded at 7.55 percent in August of 2012. Historically, from 1969 until 2012, India Inflation Rate averaged 7.75 Percent reaching an all time high of 34.68 Percent in September of 1974 and a record low of -11.31 Percent in May of 1976. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. This page includes a chart with historical data for India Inflation Rate.

CHART 4.1.3

INFLATION RATE
12 10 percentage 8 6 4 2 0 2008 2009 2010 years 2011 2012 CONSUMING POWER

FUEL AND OIL: The government today said high interest rates and fuel prices have affected the growth of the domestic automobile sector during the recent months. "Factors like rising interest rates and hike in fuel prices have affected the growth of this sector, thereby, showing a marginal growth during the recent months,"
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TABLE 4.1.4 PERTOLEUM PRICE YEAR Petrol price / litre 2008 33.4 2009 15.4 2010 40.1 2011 46.1 (%) 2012 52.6

CHART 4.1.4

fuel growth
fuel growth

52.6 40.4 33.4 40.1

15.4

2008

2009

2010

2011

2012

INTERPRETATION Petrol rate increases 33.4% in 2008 because of VAT tax increased that year automobile growth falls down. After 2008 price rate falls down that time large number of sales in automobile. In 2010 and 2011 have seen steady increases in the oil price, added to which the VAT tae was increased from 17.5% t0 20% from the beginning of 2011. In fact, 2012 has
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seen the real terms price slightly slip back to the continued high level of general inflation, although the nominal 5-year increase of 52.6% exceeds even 2000. Of the march 2012 price of 134.1p/liter, 80.3p or 59.9% went to government (57.95p fuel duty and 22.53p VAT). Rising fuel prices will dampen industry growth rate.

4.4.2 INDUSTRY ANALYSIS :( AUTOMOBILE) The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Automobile Industry is one of the fastest growing sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in the income is the primary growth driver of the automobile industry in India. In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth. Segmentation of Automobile Industry: The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers. Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry.

Industry Life Cycle: 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: pioneer, growth, maturity and decline.

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In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. In the growth phase, the product market has been established and there is at least some historical guide to ground demand estimates. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The cumulative growth of the Passenger Vehicles segment during April 2007 March 2008 was 12.17 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07 percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent during April- March 2008 compared to the last year. Two Wheelers registered a negative growth rate of 7.92 % during this period, with motorcycles and electric two wheelers segments declining by 11.90 percent and 44.93% respect. However, Scooters and Mopeds segment grew by 11.64% and 16.63% respect. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase. As the product matures, growth slows as penetration reaches practical limits. Companies began to focus on market share rather than growth. Industry demand tends to follow the overall economy, but the scope of growth of the automobile sector is very much
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possible in India due to the increasing income of the middle class and their income as well as standard of living.

SWOT ANALYSIS A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be 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 strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points:

1. Strengths Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc

2. Weaknesses Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck

3. Opportunities Increasing challenges in consumer demands, technology development, and globalization. Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties
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4. Threats Ignorance of Research & development Rising interest rates Cut throat competition

4.4.3 COMPANY ANALYSIS The company analysis shows the long term strength of the company that what is the financial position of the company in the market, where it stands among its competitors and who are the key drivers of the company, what are the future plans of the company, what are the policies of government towards the company and how the stake of company divested among different groups of people. Here, I have taken three automobile companies namely TATA Motors, Maruti Suzuki and Mahindra and Mahindra for the purpose of fundamental analysis. TATA MOTORS:

Tata Motors Limited formerly is an Indian multinational automotive manufacturing company headquartered in Mumbai, India and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans and coaches. It is the world's eighteenth-largest motor vehicle manufacturing company, fourth-largest truck manufacturer and second-largest bus manufacturer by volume. Tata Motors Limited is India's largest automobile company; with consolidated revenues of Rs. 34,575 billion in 2012.It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and
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utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. Totally 59,759 (2012) workers in Tata motors. VISION: The Tata Motors Groups over 59,759 employees are guided by the vision to be best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics. HISTORY OF TATA MOTOR: In 1954 Tata entered the commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz of Germany. After that in 1991 Tata entered in passenger vehicle by launching TATA SIERRA In 1992 launched three more vehicles, TATA ESTATE(light commercial vehicle) In 1994 launched TATA SUMO (LCV) its more popular car company earns more profit. In 1998 launched TATA SAFARI it is Indias first sports utility vehicle. In 2005 launched mini Tata truck TATA ACE. In 2008, Tata Motors acquired the British car maker JAGUAR LAND ROVER, manufacturer of the Jaguar, Land Rover and Daimler luxury car brands, from Ford Motor Company In 2010, Tata Motors acquired an 80% stake in the Italy-based design and engineering company Trilix for a consideration of 1.85 million. The acquisition formed part of the company's plan to enhance its styling and design capabilities. In 2012, Tata Motors announced it will invest around Rs 600 crore on developing Futuristic Infantry Combat Vehicles in collaboration with DRDO. PRODUCTS: Tata Ace Zip Tata Super Ace CNGElectric Hybrid low-floored Star buses

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TATA SUMO, TATA INDICA, TATA ACE etc,

MARUTI SUZUKI:

Maruti Suzuki India Limited commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation. Maruti stared on 1981. It has a market share of 44.9% of the Indian passenger car market as of March 2011.Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, Swift, Wagon-R, Estillo and sedans Dzire, SX4, in the 'C' segment Maruti Eeco, Multi Purpose vehicle Ertiga and Sports Utility vehicle Grand. It was the first company in India to mass-produce and sell more than a million cars. It is the market leader in India, and on 17 September 2007, Maruti Udyog Limited was renamed as Maruti Suzuki India Limited.

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The company exports more than 50,000 cars annually and has an extremely large domestic market in India selling over 730,000 cars annually. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. PRODUCTS: 1. 800 (Launched 1983) 2. Omni (Launched 1984) 3. WagonR (Launched 1999) 4. Alto (Launched 2000) 5. Swift (Launched 2005) 6. Estilo (Launched 2007) Maruti Suzuki is the only Indian Company to have crossed the 10 million sales mark since its inception. In 2011-2012, the company sold over 1.13 million vehicles including 1, 27,379 units of exports. The Company employs over 9000 people (as on 31st March, 2012).Total revenue of the Maruti Suzuki is 37,522 crore and Net income is 2,288 crore.

MAHINDRA AND MAHINDRA:

Mahindra & Mahindra is a major automobile manufacturer of utility vehicles, passenger cars, pickups, commercial vehicles, and two wheelers. Its tractors are sold on six continents. It has acquired plants in China and the United Kingdom, and has three assembly plants in the USA. M&M has partnerships with international companies like Renault SA, France and International Truck and Engine Corporation, USA.M&M made its entry into the passenger car segment with the Logan in April 2007 under the Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks segment with Mahindra Navistar, the joint venture with International Truck, USA.
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M&M's automotive division makes a wide range of vehicles including MUVs, LCVs and three wheelers. It offers over 20 models including new generation multi-utility vehicles like the Scorpio and the Bolero. It formerly had a joint venture with Ford called Ford India Private Limited to build passenger cars. PRODUCTS: Alfa Mahindra Navistar Trucks Bolero Maxi Truck Bolero REVA Electric Cars Scorpio

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4.2 RATIO ANALYSIS OF TATA, SUZUKI AND MAHINDRA RETURN ON INVESTMENT TABLE 4.2.1 RETURN ON INVESTMENT YEARS TATA MARUTI MAHINDRA MAR08 21.46 28.21 16.68 MAR09 6.47 19.67 13.81 MAR10 12.83 30.21 28.16 MAR11 13.10 24.50 27.05 MAR12 13.75 15.44 24.56

CHART 4.2.1
35 30 25 20 15 10 5 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA MARUTI MAHINDRA

INTERPRETATIONS: Tata motors shows positive trend (21.46) in March 2008. But 2009 ROI falls down b After that there was sudden boom in 2010-2012.Maruti Suzuki also declines from 30.21 to 15.44. Maruti shows poor ROI in past five year. Mahindra and Mahindra declines from 16.68 to 13.81 in March 2009. But it shows positives ROI in 2010&2011. In present year 2012 declines from 27.05. In future Mahindra and Mahindra best one to get more returns.

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DIVIDEND PAYOUT RATIO TABLE 4.2.2 DIVIDEND PAYOUT RATIO YEAR TATA SUZUKI MAHINDRA MAR8 28.50 8.34 25.61 MAR9 31.12 8.29 33.32 MAR10 38.34 6.93 26.32 MAR,11 70.32 9.46 26.52 MAR,12 103.09 13.25 26.65

CHART 4.2.2
120 100 80 60 40 20 0 MAR8 MAR9 MAR10 MAR,11 MAR,12 TATA SUZUKI MAHINDRA

INTERPRETATION Dividend payout ratio is the percentage of earnings paid to shareholders in dividends. It provides an idea to investor of how well earnings support the dividend payments. From 2010 to 2012 Maruti Suzuki company stable payout ratio. Dividend payout ratio of Tata and Mahindra both the company showed a positive trend in 2009. Both Tata and Mahindra have increased their payout ratio in which Tata motors shows a higher payout ratio.

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PRICE EARNING RATIO TABLE 4.2.3 PRICE EARNING RATIO YEAR TATA SUZUKI MAHINDRA MAR08 2.21 13.80 7.55 MAR09 1.85 18.48 6.25 MAR10 3.85 16.40 14.67 MAR11 8.74 15.93 15.45 MAR12 70.39 23.86 14.32

CHART 4.2.3

80 70 60 50 40 30 20 10 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA SUZUKI MAHINDRA

INTERPRETATION Tata motors P/E ratio is the lowest in first three years 2008 to 2010.TATA has the highest P/E ratio in 2011 which indicates that it is overvalued and Mahindras P/E ratio is the lowest in 2009 which indicates that it is undervalued and there is a scope for growth in the future. Suzuki stable in past year. Here Mahindra is best one to invest.

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EARNINGS PER SHARE5 TABLE 4.2.4 EARNINGS PER SHARE YEAR TATA SUZUKI MAHINDRA MAR08 52.63 59.91 46.15 MAR09 19.48 42.18 30.69 MAR10 39.26 86.45 36.89 MAR11 28.55 79.21 45.33 MAR12 3.91 56.60 48.88

CHART 4.2.4
90 80 70 60 50 40 30 20 10 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA SUZUKI MAHINDRA

INTERPRETATION EPS measures the profit available to the equity shareholders per share, that is, the amount that they can get on every share held. In March08 Maruti Suzuki, Tata and Mahindra evenly raising the EPS, next year Suzuki EPS increases near 42 but Tata affected. In March10 Tata and Mahindra grows equally but Maruti Eps grows above 80. March11 Maruti maintains same point and Mahindra little grows, Tata again falls down. In March12 Maruti and Mahindra company grows above 55.00 but Tata affected because net profit which resulted in low EPS. Mahindra not much affected Mahindra is not much affected as its sales have increased from the previous year. But as trend shows Mahindra motors has potential so a shareholder can expect better in future.
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DIVIDEND PER SHARE TABLE 4.2.5 DIVIDEND PER SHARE YEAR TATA SUZUKI MAHINDRA MAR08 15.00 5.00 11.50 MAR09 6.00 3.50 10.00 CHART 4.2.5 MAR10 15.00 6.00 9.50 MAR11 20.00 7.50 11.50 MAR12 4.00 7.50 12.50

20 18 16 14 12 10 8 6 4 2 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA SUZUKI MAHINDRA

INTERPRETATION Tata motors and Mahindra both the companies showed a positive trend in paying dividends till 2008, but the scenario changed in 2009 as Tata motors companys dividend per share fell. Mahindra has made a slight reduction from rs.11.5 per share in 2008 to 10 per share in 2009.After 2009 both Tata and Mahindra again showed a positive trend and the effect was more on Tata motors. Mahindra was also positive in 2010 & 2011; Tata or Mahindra could be the best option for an investor.

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NET PROFIT MARGIN TABLE 4.2.6 NET PROFIT MARGIN YEARS TATA MARUTI MAHINDRA MAR08 13.08 17.28 13.64 MAR09 10.30 11.90 17.05 MAR10 14.85 15.30 17.83 MAR11 10.52 11.64 10.83 MAR12 7.68 9.39 15.32

CHART 4.2.6
18 16 14 12 10 8 6 4 2 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA MARUTI MAHINDRA

INTERPRETATION As in the operating profit increases then decline, similarly net profit margin has shown sudden growth for a period of one year, then again decline. Mahindra and Mahindra first 3 years increases after that in 2011falls down but in 2012 reaches 15.32.Maruti Suzuki net profit margin is currently decline because of so many failure models in current year. Tata motors net profit also decline slowly from 14.85 to 7.68

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EARNINGS YIELD TABLE 4.2.7 EARNINGS YIELD YEARS TATA MARUTI MAHINDRA MAR08 45.21 7.24 13.24 MAR09 54.02 5.40 15.99 MAR10 25.90 6.09 6.81 MAR11 11.43 6.27 6.47 MAR12 1.42 4.19 6.98

CHART 4.2.7
60 50 40 30 20 10 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA MARUTI MAHINDRA

INTERPRETATION According to profit sudden increases and decreases. It has even affected the earnings yield of the company. Tata had shown a growth for 2 years and in next 3 year. it had drastic falls.maruti has a stable earning yield. Mahindra had high growth rate for past 2 years but it do had a down fall but not to the extent of Tata

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DIVIDEND YIELD TABLE 4.2.8 DIVIDEND YIELD YEARS TATA MARUTI MAHINDRA MAR08 12.88 0.60 3.29 MAR09 16.63 0.44 5.21 MAR10 9.89 0.42 1.75 MAR11 8.01 0.59 1.64 MAR12 1.45 0.55 1.78

CHART 4.2.8
18 16 14 12 10 8 6 4 2 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA MARUTI MAHINDRA

INTERPRETATION From the above table it is inferred that all the company have a decline dividend yield rate. But TATA and MAHINDRA have improved its dividend yield rate but all f a sudden had a depreciating dividend yield rate.

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OPERATING PROFIT RATIO TABLE 4.2.9 OPERATING PROFIT YEARS TATA MARUTI MAHINDRA MAR08 10.53 14.54 10.23 MAR09 6.71 9.53 9.81 MAR10 11.40 13.04 16.29 MAR11 9.81 9.50 14.65 MAR12 7.70 7.06 11.83

CHART 4.2.9
18 16 14 12 10 8 6 4 2 0 MAR08 MAR09 MAR10 MAR11 MAR12 TATA MARUTI MAHINDRA

INTERPRETATION Tata motors have given positive trend at 2008, but at 2009 it drops down to 6.71% because of acquiring JAGUAR LAND ROVER. Again in 2010 it increases and at 2011 and 2012 it
decreases. From the above chart we can interpret that Mahindra show stability in its growth. It doesnt fall too fast but it rises very fast. Maruthi also shows its stability in past five years.

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CHAPTER-5 FINIDINGS AND SUGGESTIONS & CONCLUSIONS 5.1 FINDINGS From the data analysis and interpretations of the ratios of three companies viz. Tata Motors, Maruti Suzuki and Mahindra and Mahindra, the following findings have been given: The three companies were performing well till 2008 with a positive trend in the earnings per share. But there was a downward trend in 2009. Especially, TATA has witnessed a steep fall in the year 2009. The sales trend has been upward and positive in case of all the three companies. The sales growth looks positive but in the year 2009, TATAs sales have declined whereas Maruti and Mahindra have maintained the same upward positive trend. In case of dividend per share, there were fluctuations during the period 2005-2009. Due to recession, the dividends per share have declined in all the three companies. Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Mahindra has made a slight reduction from rs.11.5 per share in 2008 to rs.10 per share this year. The return on investment has been fluctuating since 2005 and the year 2009 witnessed low returns in case of all the companies amongst which TATA has the least rate of return. Compared to the three companies, Mahindra has the highest ROI in 2009. Maruti had a stable dividend payout ratio since 2005. TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher payout ratio. The three companies have witnessed a low price earnings ratio in 2008 compared to the previous years. But the ratio increased in 2009 in three companies. TATA has the highest P/E ratio in 2009 which indicates that it is overvalued and Mahindras P/E ratio is the lowest in 2009 which indicates that it is undervalued and there is a scope for growth in the future. By analyzing the current trend of Indian Economy and Automobile Industry I have found that being a developing economy there is lot of scope for growth and this industry still has to cross many levels so there are huge opportunities to invest in and this is being proved as more and more foreign companies are setting up there ventures in India.
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Increase in income level, increase in consumer demand, technology development, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy. 5.2 SUGGESTIONS By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart 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. In view of all these, TATA is not a better option for an investor. The global turmoil in financial markets has affected Maruti also. The 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 maintaining 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 compared to 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 from 2008. 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
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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.

5.3 CONCLUSION Indian Automobile has a lot of scope for both two wheelers and four wheelers due to development in infrastructure of the country and especially the rural sector in which demand of two wheelers has increased even in recession. According to Indian Statistical Organization the per capita income (Rs.38000) is increasing and national income at the rate of 14.4% which shows potential to buy vehicle in auto industry. The growth rate of Indian Automobile is so fast that by 2016 Indian Industry will be world 7 largest manufacturers in all sections. The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also
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planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra grow even more than expectations. 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, Tata purchased Britains Jaguar Land Rover (JLR) from Ford Motor Company. 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 undervalued giving it a potential for growth. A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee. The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments

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APPENDIX
BALANCE SHEET OF TATA MOTORS: PARTICULARS SOURCES OF FUNDS Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

634.75 634.75 0.00 0.00 18,709.16 23.75 19,367.66 6,915.77 4,095.86 11,011.63 30,379.29

634.65 634.65 3.06 0.00 19,351.40 24.19 20,013.30 7,766.05 8,132.70 15,898.75 35,912.05

570.60 570.60 0.00 0.00 14,208.55 24.63 14,803.78 7,742.60 8,883.31 16,625.91 31,429.69

514.05 514.05 0.00 0.00 11,855.15 25.07 12,394.27 5,251.65 7,913.91 13,165.56 25,559.83

385.54 385.54 0.00 0.00 7,428.45 25.51 7,839.50 2,461.99 3,818.53 6,280.52 14,120.02

27,111.76 9,965.87 17,145.89 2,073.96 20,493.55 4,588.23 2,708.32 1,115.08 8,411.63 6,400.65 725.88 15,538.16 0.00 21,271.45 3,600.82 24,872.27 -9,334.11 0.00 30,379.29 3,284.12 60.95

21,883.32 8,466.25 13,417.07 4,058.56 22,624.21 3,891.39 2,602.88 638.79 7,133.06 5,852.42 1,790.13 14,775.61 0.00 15,740.69 3,222.71 18,963.40 -4,187.79 0.00 35,912.05 4,798.83 314.93

18,416.81 7,212.92 11,203.89 5,232.15 22,336.90 2,935.59 2,391.92 612.16 5,939.67 5,248.71 1,141.10 12,329.48 0.00 16,909.30 2,763.43 19,672.73 -7,343.25 0.00 31,429.69 3,708.33 259.03

13,905.17 6,259.90 7,645.27 6,954.04 12,968.13 2,229.81 1,555.20 638.17 4,423.18 5,909.75 503.65 10,836.58 0.00 10,968.95 1,877.26 12,846.21 -2,009.63 2.02 25,559.83 5,433.07 240.64

10,830.83 5,443.52 5,387.31 5,064.96 4,910.27 2,421.83 1,130.73 750.14 4,302.70 4,831.36 1,647.17 10,781.23 0.00 10,040.37 1,989.43 12,029.80 -1,248.57 6.05 14,120.02 5,590.83 202.70

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PROFIT AND LOSS ACCOUNT OF TATA MOTORS: PARTICULARS INCOME Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE Raw Materials Power & Fuel Cost Employe Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

59,220.94 5,003.72 54,217.22 -11.16 623.84 54,829.90

52,067.87 4,110.63 47,957.24 341.53 354.22 48,652.99

38,173.39 2,800.10 35,373.29 1,220.86 606.63 37,200.78

28,538.20 33,123.54 2,877.53 4,355.63 25,660.67 28,767.91 921.29 734.17 -238.04 -40.48 26,343.92 29,461.60

41,081.79 550.89 2,691.45 2,386.91 3,248.91 1,610.69 -907.13 50,663.51 4,177.55 4,166.39 1,218.62 2,947.77 1,606.74 0.00 1,341.03 0.00 1,341.03 98.80 1,242.23 9,581.72 0.00 1,280.70 181.54 31,735.47 3.91 200.00 60.95

35,047.05 471.28 2,294.02 1,753.46 2,790.19 2,067.42 -817.68 43,605.74 4,705.72 5,047.25 1,383.79 3,663.46 1,360.77 106.17 2,196.52 0.00 2,196.52 384.70 1,811.82 8,558.69 0.00 1,274.23 192.80 6,346.14 28.55 200.00 314.93

25,366.12 362.62 1,836.13 1,289.60 2,126.10 1,707.06 -740.54 31,947.09 4,032.83 5,253.69 1,246.25 4,007.44 1,033.87 144.03 2,829.54 0.00 2,829.54 589.46 2,240.08 6,580.97 0.00 859.05 132.89 5,705.58 39.26 150.00 259.03

18,801.37 20,891.33 304.94 325.19 1,551.39 1,544.57 866.65 904.95 1,652.31 2,197.49 1,438.89 964.78 -916.02 -1,131.40 23,699.53 25,696.91 1,723.10 2,644.39 704.92 1,939.47 874.54 51.17 1,013.76 15.29 1,029.05 12.50 1,001.26 4,898.16 0.00 311.61 34.09 5,140.08 19.48 60.00 240.64 3,030.52 3,764.69 471.56 3,293.13 652.31 64.35 2,576.47 0.00 2,576.47 547.55 2,028.92 4,805.58 0.00 578.43 81.25 3,855.04 52.63 150.00 202.70

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BALANCE SHEET OF MARUTI SUZUKI: PARTICULARS SOURCES OF FUNDS Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses TOTAL ASSETS Contingent Liabilities Book Value (Rs) 14,734.70 7,214.00 7,520.70 611.40 6,147.40 1,796.50 937.60 2,436.10 5,170.20 2,852.50 0.00 8,022.70 0.00 5,338.00 698.50 6,036.50 1,986.20 0.00 16,265.70 5,925.90 525.68 11,737.70 6,208.30 5,529.40 1,428.60 5,106.70 1,415.00 893.30 95.50 2,403.80 1,626.30 2,413.00 6,443.10 0.00 3,805.20 525.80 4,331.00 2,112.10 0.00 14,176.80 5,450.60 479.99 10,406.70 5,382.00 5,024.70 387.60 7,176.60 1,208.80 809.90 98.20 2,116.90 1,739.10 0.00 3,856.00 0.00 3,160.00 628.40 3,788.40 67.60 0.00 12,656.50 3,657.20 409.65 8,720.60 4,649.80 4,070.80 861.30 3,173.30 902.30 918.90 239.00 2,060.20 1,809.80 1,700.00 5,570.00 0.00 3,250.90 380.70 3,631.60 1,938.40 0.00 10,043.80 1,901.70 323.45 7,285.30 3,988.80 3,296.50 736.30 5,180.70 1,038.00 655.50 324.00 2,017.50 1,173.00 0.00 3,190.50 0.00 2,718.90 369.50 3,088.40 102.10 0.00 9,315.60 2,734.20 291.28 144.50 144.50 0.00 0.00 15,042.90 0.00 15,187.40 0.00 1,078.30 1,078.30 16,265.70 144.50 144.50 0.00 0.00 13,723.00 0.00 13,867.50 31.20 278.10 309.30 14,176.80 144.50 144.50 0.00 0.00 11,690.60 0.00 11,835.10 26.50 794.90 821.40 12,656.50 144.50 144.50 0.00 0.00 9,200.40 0.00 9,344.90 0.10 698.80 698.90 10,043.80 144.50 144.50 0.00 0.00 8,270.90 0.00 8,415.40 0.10 900.10 900.20 9,315.60 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

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PROFIT AND LOSS ACCOUNT OF MARUTI SUZUKI: PARTICULAR INCOME Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses OPERATING PROFIT PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax REPORTED NET PROFIT Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

39,495.30 3,937.10 35,558.20 826.80 160.10 36,545.10

40,865.50 4,304.00 36,561.50 784.60 73.20 37,419.30

32,174.10 2,856.40 29,317.70 662.00 200.90 30,180.60

23,381.50 21,200.40 2,652.10 3,133.60 20,729.40 18,066.80 491.70 494.00 -356.60 336.30 20,864.50 18,897.10

28,330.60 229.50 843.80 53.10 0.00 3,791.00 -42.70 33,205.30 2,513.00 3,339.80 55.20 3,284.60 1,138.40 0.00 2,146.20 0.00 2,146.20 511.00 1,635.20 4,874.70 0.00 216.70 35.10 2,889.10 56.60 150.00 525.68

28,880.00 210.20 703.60 1,949.40 1,153.87 289.73 -25.70 33,161.10 3,473.60 4,258.20 24.40 4,233.80 1,013.50 0.00 3,220.30 18.90 3,239.20 820.20 2,288.60 4,281.10 0.00 216.70 35.10 2,889.10 79.21 150.00 479.99

22,636.30 216.60 545.60 1,061.60 1,032.17 201.73 0.00 25,694.00 3,824.60 4,486.60 33.50 4,453.10 825.00 0.00 3,628.10 51.10 3,679.20 1,094.90 2,497.60 3,057.70 0.00 173.30 28.80 2,889.10 86.45 120.00 409.65

15,983.20 13,958.30 193.60 147.30 471.10 356.20 716.10 523.30 817.66 521.48 236.84 287.62 -22.30 -19.80 18,396.20 15,774.40 1,976.60 2,468.30 51.00 2,417.30 706.50 0.00 1,710.80 37.90 1,748.70 457.10 1,218.70 2,413.00 0.00 101.10 17.20 2,889.10 42.18 70.00 323.45 2,628.70 3,122.70 59.60 3,063.10 568.20 0.00 2,494.90 76.60 2,571.50 763.30 1,730.80 1,816.10 0.00 144.50 24.80 2,889.10 59.91 100.00 291.28

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BALANCE SHEET OF MAHINDRA&MAHINDRA:

PARTICULARS SOURCES OF FUNDS Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

Mar '12

Mar '11

Mar '10

Mar '09

Mar '08

294.52 294.52 0.00 0.00 11,876.57 0.00 12,171.09 400.18 2,774.04 3,174.22 15,345.31

293.62 293.62 33.97 0.00 9,974.62 11.18 10,313.39 407.23 1,998.06 2,405.29 12,718.68

282.95 282.95 8.01 0.00 7,527.60 11.67 7,830.23 602.45 2,277.70 2,880.15 10,710.38

272.62 272.62 0.00 0.00 4,959.26 12.09 5,243.97 981.00 3,071.76 4,052.76 9,296.73

239.07 239.07 0.00 0.00 4,098.53 12.47 4,350.07 617.26 1,969.80 2,587.06 6,937.13

7,727.16 3,216.34 4,510.82 569.93 10,310.46 2,358.39 1,988.36 1,188.43 5,535.18 2,985.59 0.00 8,520.77 0.00 6,721.40 1,845.27 8,566.67 -45.90 0.00 15,345.31 3,920.27 206.63

5,849.27 2,841.73 3,007.54 1,364.31 9,325.29 1,694.21 1,354.72 447.62 3,496.55 2,653.52 167.02 6,317.09 0.00 5,289.67 2,005.88 7,295.55 -978.46 0.00 12,718.68 2,632.10 174.85

4,866.18 2,537.77 2,328.41 1,374.31 6,398.02 1,188.78 1,258.08 475.17 2,922.03 2,034.47 1,268.06 6,224.56 0.00 3,822.50 1,796.54 5,619.04 605.52 4.12 10,710.38 2,307.70 138.02

4,653.66 2,326.29 2,327.37 886.96 5,786.41 1,060.67 1,043.65 635.61 2,739.93 1,402.45 938.82 5,081.20 0.00 3,520.20 1,277.56 4,797.76 283.44 12.55 9,296.73 1,220.39 191.91

3,552.64 1,841.68 1,710.96 649.94 4,215.06 1,084.11 1,004.88 310.58 2,399.57 866.19 550.65 3,816.41 0.00 2,525.31 943.46 3,468.77 347.64 13.53 6,937.13 985.35 181.43

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PROFIT AND LOSS OF MAHINDRA & MAHINDRA: PARTICULARS INCOME Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

34,353.63 2,500.99 31,852.64 574.94 597.33 33,024.91

25,569.55 2,092.02 23,477.53 563.13 202.23 24,242.89

20,323.63 14,668.13 1,807.30 1,587.05 18,516.33 13,081.08 285.09 132.65 23.69 -156.29 18,825.11 13,057.44

12,894.94 1,584.57 11,310.37 575.96 149.11 12,035.44

24,258.94 175.78 1,701.78 125.81 0.00 2,491.35 -73.53 28,680.13 3,769.84 4,344.78 162.75 4,182.03 576.14 0.00 3,605.89 0.00 3,605.89 727.00 2,878.89 4,421.19 0.00 767.48 101.13 5,890.30 48.88 250.00 206.63

16,604.88 143.93 1,445.56 98.33 1,735.63 261.10 -50.87 20,238.56 3,441.20 4,004.33 70.86 3,933.47 413.86 0.00 3,519.61 0.00 3,519.61 857.51 2,662.10 3,633.68 0.00 706.08 96.56 5,872.47 45.33 230.00 174.85

12,461.56 120.97 1,199.85 96.92 1,439.26 264.21 -59.55

9,208.71 98.69 1,024.52 75.36 1,109.96 165.83 -42.83

7,963.82 91.33 853.65 73.35 1,108.33 257.84 -46.49 10,301.83 1,157.65 1,733.61 87.59 1,646.02 238.66 0.59 1,406.77 0.00 1,406.77 303.40 1,103.37 2,338.01 0.00 282.61 38.48 2,390.73 46.15 115.00 181.43

15,523.22 11,640.24 3,016.80 3,301.89 156.85 3,145.04 370.78 0.00 2,774.26 72.49 2,846.75 759.00 2,087.75 3,061.66 0.00 549.52 74.23 5,659.08 36.89 190.00 138.02 1,284.55 1,417.20 134.12 1,283.08 291.51 0.00 991.57 48.97 1,040.54 199.69 836.78 2,431.53 0.00 278.83 33.23 2,726.16 30.69 100.00 191.91

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BIBILOGRAPHY Text Books Punithavathy Pandian-Security Analysis and Portfolio Management Vikas Publications. V.A. Avadhani- Security analysis and portfolio management Gordon and Natarajan- Financial Markets and Services by, Himalaya Publications. Shashi K Gupta and R. K Sharma-Financial Management by, Kalyani Publications. Newspapers Economic times Business line Websites www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.indiainfoline.com www.sebi.gov.in www.tatamotors.com www.marutisuzuki.com www.mahindra.com

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