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Analysis of Automobile Industry

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This report is submitted as partial fulfillment of the requirement of PGDM programme of ITM Business School, Siruseri, Chennai.


Institute for Technology and Management Business SchoolSiruseri, ChennaiJuly 2010

Certificate by SIP Organization(In SIP Company Letter head)

To whomsoever it May concernThis is to certify that ___________________ was with us from _____________ to ______________ as intern. He was maintaining 100% attendance and he has no dues.The report submitted by the candidate is of his original work.

Place:Date: _______________________ Signature of Company Guide


I would like to express my gratitude to Dr. G.K.Sharma, Director, Institute for Technology and Management Business School, Chennai for allowing me to do my Summer Internship Project.I am especially thankful to Mr. Bharat Munoth, Managing Director, Munoth Financial Services Ltd., Chennai. I am highly indebted to Mr. Dipesh Shah, Chief Executive and company project guide, who has provided me with the necessary information and also for the support extended out to me in the completion of this report and his valuable suggestion and comments on bringing out this report in the best way possible. I also thank Prof. Ravimohan, Institute for Technology and Management Business School, Chennai who has supported me with his valuable insights into the completion of the project. I am grateful to all faculty members of Institute for Technology and Management Business School, Chennai and who have helped me in the successful completion of this project.


The automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand. The Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub. So investment in the stocks of the automobile industry is one of the attractive options.Investing in shares of a company is highly rewarding at the same time it is highly risky. Moreover the Indian Stock market is highly volatile with large volumes being traded. Analysis of stocks is highly helpful to reduce the risks and to make good money.This project is aimed at analyzing the Indian automobile industry in the view of its feasibility as an investment option. A detailed analysis of the Indian automobile industry is covered in respect of past growth and performance. The fundamental analysis is done which analyzes the economy in the broader sense and the industry is analyzed using Industry Life Cycle, Porters Five Forces Model and SWOT Analysis.Three companies namely Mahindra & Mahindra, Tata Motors and Ashok Leyland are chosen and their financial and non-financial information are analyzed. The technical analysis is also done for the stocks using some technical indicators.Based on the analysis done the intrinsic value of the shares of the companies were found out and their future price directions were determined. Based on the analysis the future price directions are determined and recommendations are given to make the project more meaningful.


This project is divided into 14 Chapters.1. Introduction to the project: This chapter gives a description about the project. It covers the objectives, scope, limitations, methodology used and the sample design.2. Introduction to Munoth Financial Services Limited: This chapter gives a brief overview about the SIP Organization.3. Introduction to Indian Automobile Industry: This chapter gives a birds eye view on the Indian Automobile Industry.4. Introduction to Fundamental Analysis: This chapter discusses about the Fundamental Analysis and the various concepts of it in detail.5. Introduction to Technical Analysis: This chapter discusses about the concept of Technical Analysis in detail.6. Indian Economic Analysis: This chapter analyses in the overall Indian economy in a broader sense.7. Indian Automobile Industry Analysis: This chapter gives details about the Indian Automobile Industry and the industry is analyzed using tools like SWOT, Porters Five Forces Model, etc.8. Analysis of Mahindra & Mahindra Limited: The fundamental and technical analysis of Mahindra & Mahindra Ltd., is done in this chapter.9. Analysis of Tata Motors Limited: The fundamental and technical analysis of Tata Motors Ltd., is done in this chapter.10. Analysis of Ashok Leyland Limited: The fundamental and technical analysis of Ashok Leyland Limited is done in this chapter11. Findings: This chapter gives the information on the findings of the analysis made in the preceding chapters.12. Conclusions: The conclusions are drawn based on the findings of the analysis13. Recommendations: Based on the findings and conclusions recommendations are given in this chapter14. References: This chapter lists the sources from which the information for the project is collected.


Sl. No.ParticularsPg. No.

Cover & Title Pagei

Certificate from SIP Companyii




List of Figuresvi

List of Tablesvii

1.Introduction to the Project1

1.1. Overview1

1.2. Objectives, Scope and Limitations1

1.3. Methodology, Data Sources and Samples2

2.An Introduction to Munoth Financial Services Limited3

2.1. The Company3

2.2. Vision, Values and Objectives3

2.3. Services4

2.4. Clients4

3.Introduction to Indian Automobile Industry5

4.Introduction to Fundamental Analysis6

4.1. Economic Analysis8

4.2. Industry Analysis10

4.3. Company Analysis11

5.Introduction to Technical Analysis17

5.1. Price Charts17

5.2. Volume19

5.3. Trends20

5.4. Support & Resistance Levels21

5.5. Technical Indicators22

6.Indian Economic Analysis28

7.Indian Automobile Industry Analysis30

7.1. Segmentation of the Industry30

7.7.2. Key Players in the Industry31

7.3. Contribution to the GDP31

7.4. Automobile Exports32

7.5. The Future of the Industry32

7.6. Industry Life Cycle33

7.7. Porters Five Force Analysis33

7.8. SWOT Analysis34

8.Analysis of Mahindra & Mahindra Limited36

8.1. Analysis of Non-Financial Information36

8.2. Analysis of Financial Information39

8.3. Analysis of Key Ratios42

8.4. Analysis of Technical Indicators46

9.Analysis of Tata Motors Limited51

9.1. Analysis of Non-Financial Information51

9.2. Analysis of Financial Information54

9.3. Analysis of Key Ratios57

9.4. Analysis of Technical Indicators61

10.Analysis of Ashok Leyland Limited66

10.1. Analysis of Non-Financial Information66

10.2. Analysis of Financial Information69

10.3. Analysis of Key Ratios72

10.4. Analysis of Technical Indicators76





List of Figures

Sl. No.Figure TitlePg. No.

1India GDP Growth Rate28

2Industry Segmentation30

3Automobile Exports32

4M&M Shareholding Pattern36

5Debt-Equity Ratio of Mahindra & Mahindra42

6Return on Equity Ratio of Mahindra & Mahindra43

7Price Earnings Ratio of Mahindra & Mahindra43

8Dividend Per Share of Mahindra & Mahindra44

9Dividend Payout Ratio of Mahindra & Mahindra44

10Dividend Yield Ratio of Mahindra & Mahindra45

11Book Value Per Share of Mahindra & Mahindra45

12EMA of Mahindra & Mahindra46

13RSI of Mahindra & Mahindra48

14ROC of Mahindra & Mahindra49

15MACD of Mahindra & Mahindra50

16Tata Motors Shareholding Pattern51

17Debt-Equity Ratio of Tata Motors57

18Return on Equity Ratio of Tata Motors58

19Price Earnings Ratio of Tata Motors58

20Dividend Per Share of Tata Motors59

21Dividend Payout Ratio of Tata Motors59

22Dividend Yield Ratio of Tata Motors60

23Book Value Per Share of Tata Motors60

24EMA of Tata Motors61

25RSI of Tata Motors63

26ROC of Tata Motors64

27MACD of Tata Motors65

28Ashok Leyland Shareholding Pattern66

29Debt Equity Ratio of Ashok Leyland72

30Return on Equity of Ashok Leyland73

31Price Earnings Ratio of Ashok Leyland73

32Dividend Per Share of Ashok Leyland74

33Dividend Payout Ratio of Ashok Leyland74

34Dividend Yield Ratio of Ashok Leyland75

35Book Value Per Share of Ashok Leyland75

36EMA of Ashok Leyland76

37RSI of Ashok Leyland78

38ROC of Ashok Leyland79

39MACD of Ashok Leyland80

40EPS and Net Profit Margin of Mahindra & Mahindra81

41EPS and Net Profit Margin of Tata Motors82

42EPS and Net Profit Margin of Ashok Leyland83

List of Tables

Sl. No.Table TitlePg. No.

1Balance Sheet of Mahindra & Mahindra39

2Profit & Loss Account of Mahindra & Mahindra40

3Cash Flow Statement of Mahindra & Mahindra41

4Key Ratios of Mahindra & Mahindra42

5Balance Sheet of Tata Motors54

6Profit & Loss Account of Tata Motors55

7Cash Flow Statement of Tata Motors56