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A STUDY ON FUNDAMENTAL ANALYSIS OF AUTOMOBILE COMPANIES IN

INDIA

Research · January 2020

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Our Heritage ISSN: 0474-9030
(UGC Care Journal) Vol-68-Issue-66-January-2020

A STUDY ON FUNDAMENTAL ANALYSIS OF AUTOMOBILE COMPANIES IN

INDIA
Dr. KhaladkarManisha R.
Associate Professor, Zeal Institute of Management and Computer Application, Narhe, Pune, India,
Dr. SachinChavan
Professor, Zeal College of Engineering & Research, Narhe, Pune, India,

ABSTRACT
The term financial market often used to refer to that market used to raise funds. A financial market in which people trade
financially securities and derivatives such as futures and options at lower transaction prices. An investor wants to invest his money
in different types of securities but not everyone the investment carries a certain amount of risk and returns as a reward. But before
making an investment in specific security he makes the analysis on the particular security. Fundamental analysis of Indian
automobile companies including five major ones automobile companies considered this, which is having a big impact on Indian
stocks market, in which the investors is given proper guidance on which stock to choose future investments and what not. This
research has exploratory research design selected based on secondary data. Years from 2014-2018 for the top five automobile
companies are Maruti Suzuki, Ford, Mahindra & Mahindra, Tata Motors and Toyota Kirloskar.
KEY WORDS: Fundamental Analysis, Automobile, NPA, ROE, P/E Ratio.
INTRODUCTION
Fundamental analysis studies the basic fundamentals that affect the economy of a particular elements, such as a stock of currency.
It tries to predict price action and trends by analyzing the economic indicators, government policy, social and other factors in a
business cycle framework. If the fundamental analyst would like to buy the stock. The current market price is below its original
value and when the stock sells the market price is much higher that the intrinsic value. Therefore, fundamental analysis is
important in stock picking.
The Indian automobile industry became the 4th largest in the world with sales increasing 9.5% year –on-year to 4.02 million units
(excluding two wheelers) in 2017. It was the 7th largest manufacturer of commercial vehicles in 2017. The two wheelers section
dominates the market in terms of volume due to the growing middle class and youth population. Moreover, the growing interest of
companies in finding companies in rural areas the market helped the growth of this sector.
India is a major auto exporter and has strong expectations for export growth in the near future. Automobile exports grew by
20.78% between April and November 2018. It is expected to grow at a CAGR of 3.05 % during 2016-2026. In addition, several
initiatives by the government of India and the major automobile players in the Indian market are expected to make India a leader
in the two-wheeler and four- wheeler market in the world by 2020.
LITERATURE REVIEW
1) T. Mallikarjunappa and Shaini Naveen (2016) combined examination on comparative analysis of risks and return in
respect of CNX Bank Nifty Stocks. This test reduces the risk and return to the keeping money segment. They consider
the implementation of the 12 recorded banks in the Nifty. The bank index examination basically examines the
implementation of managing account reserves considering the required rate of return and the risk of a particular stock in
light of various opportunity factors, Market conquests and othereconomic variables.
2) Dr. AnubhaSrivastava directed a through inquiry into the performance of automobiles Industry. Notable car institute with
Maruti in India in that review, researcher exam Mahindra and tata. The implementation of the vehicle premises was
directly indentified in this investigation with the economic system of the country. In addition it has also been found that
Mahindra and Mahindra are the most connected extensive requests on the auto list and the proportion of Indian auto than
the other two organizations bring countless open doors for these players.
3) Dr. S. Krishnaprabha and Mr. M. Vijaykumar led the exam on risk and return analysis selected stock risk and return
examination in India assumes an essential role in fundamental leadership the process of most bookmakers. Long term
financial experts may benefit from the low market volume volatile when compared to the market and with the prices in it,
there is less change in the offer speculators can ask when the offer will increase. Fast moving, the lion’s share of
information technology consumer goods, pharmaceutical sectors offer higher returns as baking and automobiles go awry
area.
4) Dr. M. MuthuGopalkrisnan and DR. K.V. Ramanathan combined studies on instability in trading Indian securities- Post
and preseason period study. In this investigation, researchers attempt to break price void in Indian securities exchange.
Evaluating market depression money-related masters will help destroy their volatility or determine their risk record of
daily opening price, shutting value, high using sectoral record Nifty on 28-03-2013 and low cost of 31 selected
institutions. This investigation to identify the relationship of instability in Pre-recession and post-recession periods.
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(UGC Care Journal) Vol-68-Issue-66-January-2020
5) S. Nagarajan and K. Prabhakaran directed the investigation of Equity Analysis of selected FMCG companies listed on
the NSE. They used standard deviations, a variety of co-profiles, and beta offers of various selected FMCG institutions
are breaking down.
6) Dr. P. Vikkreaman and P. Vardharajan checked the cost of selected institutions in the vehicle industry from 2004 to
2007. They use beta and alpha methods to reduce the risk car instution back. The arrival marker and efficient risk
measurement make reasonable assessment of enterprise choice in these institutions.
7) Vijay Bhasker says the Indian automobile industry the largest industry the word and the growing number of foreign
companies in Indian and an important sector of the economy Employment in the market is growing and will continue to
grow significantly.
8) Dharmaraj and N. Kathirvel Economic analysis appreciation for the performance and growth of selected Indian auto
companies she has shown by recent past performance and says companies are strong and they have good ability to grow
in the future.
OBJECTIVES OF THE STUDY
 To understand the performance and measure the risk of the Equity Fund by using different parameters.
 To study fundamental analysis of Equity Fund using data interpretation.
 To analyze the fundamentals of sample automobile companies selected for study.
 Analyze the automobile sector of India through fundamental analysis and assist the investors in making investment
decision.
Limitations of the study
 The analysis is fully based on secondary data and hence the accuracy of data is the main concern.
 The study is based on past performance of stock and the data since the secondary suffers from the limitations of
secondary data.
RESEARCH METHODOLOGY
Research is the systematic process in which the researcher collects the information & analyses it for own understanding.
Research helps to increase the knowledge about the particular topic. This study analyzed the equity of selected automobile
companies. This helps the investors in understanding the risk and return characteristics of the equity of automobile industry in
Indian Stock Market.
DATA COLLECTION
Data collection is a process of organizing the data. This study is entirely based on secondary data collected from the NSE
website (https://www.nseindia.com/). In addition, data has been collected from published sources as well as websites, newspapers
(Business standard, Economic times) & management, scholar, researcher etc. Data collection is done for analyzing and
interpreting. There are two types of data collection are as follows:
PRIMARY DATA
The primary data is a fresh and used for first time. I have collected primary data during the observations while my
research.
SECONDARY DATA
The secondary data is an old or used & existing or not for the first time. The secondary data can be collected through
following ways:
1. Internet
2. Books
3. Journals
SELECTION OF SAMPLE COMPANIES
The following are such companies for conducting the study that forms a sample size of 5 companies. The name of those 5
companies are as follows:
1) Maruti Suzuki
2) Ford
3) Mahindra & Mahindra Ltd
4) Tata Motors Ltd
5) Toyota Kirloskar
TIME PERIOD
5 Years, 2014-2018.
DATA ANALYSIS AND INTERPRETATION

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Our Heritage ISSN: 0474-9030
(UGC Care Journal) Vol-68-Issue-66-January-2020
Net Profit Margin: Percentage of income remaining after all operating expenses, there are interest, taxes and preferred
stock dividends (but not common stock dividends) deducted from the company’s total revenue. NPM shows how capable the
company is get all direct and indirect expenses for every rupee of revenue. Toyota Kirloskar earned 509.99 for NPM of selected
companies. The next Tata Motors earned 5.07 NPM has higher scores than all the related companies.
Year Maruti Suzuki Mahindra & Tata Motors Ford ToyotaKirloskar
Mahindra
2014 6.36 9.27 0.97 4.28 686.27
2015 7.42 8.52 -13.05 5.86 1331.16
2016 9.32 7.83 -0.14 5.86 1268.31
2017 10.80 8.27 -5.48 4.28 816.25
2018 9.68 8.94 -1.75 4.28 2137.48
Mean 8.71 8.56 -3.89 4.91 1247.89
SD 1.60 0.50 5.07 0.77 509.99

RETURN ON EQUITY:
Return on equity ratio basically measures the rate of return owners of the company’s common stock take money from
their shareholders. Return on equity shows how good a company is in getting a return on investment received from its
shareholders. ROE indicates Tata Motors earned 12.14 equity, Mahindra & Mahindra earned 3.25 scores.

Year Maruti Suzuki Mahindra & Tata Motors Ford Toyota

Mahindra Kirloskar
2014 13.26 22.39 1.74 7.69 6.97
2015 15.65 17.25 -31.93 12.11 6.51
2016 17.95 14.29 -0.26 10.80 8.24
2017 20.17 13.60 -11.48 8.16 3.79
2018 18.49 14.37 -5.13 8.16 6.64
Mean 17.10 16.38 -9.41 9.38 6.43
SD 2.40 3.25 12.14 1.74 1.45

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Our Heritage ISSN: 0474-9030
(UGC Care Journal) Vol-68-Issue-66-January-2020

Asset Turnover Ratio (%):

An efficiency ratio that measures a company’s capacity earn sales from his assets by comparing bet sales with average
total assets. It is indicates Tata Motors turnover ratio 10.7 earned, Next score to Mahindra & Mahindra its 8.87.
Year Maruti Suzuki Mahindra & Tata Motors Ford Toyota
Mahindra Kirloskar
2014 143.11 129.46 68.94 119.88 0.98
2015 148.93 118.21 72.67 133.39 0.46
2016 137.19 115.14 75.59 118.03 0.63
2017 132.34 110.22 75.22 136.17 0.45
2018 134.34 102.67 99.35 136.17 0.30
Mean 139.26 115.14 78.36 128.72 0.56
SD 5.98 8.87 10.76 8.06 0.23

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Our Heritage ISSN: 0474-9030
(UGC Care Journal) Vol-68-Issue-66-January-2020
Return On Assets:
It measures the how much profit the company makes percentage of the value of his total assets. ROA indicates Tata
Motors earned 3.65, Maruti Suzuki earned 1.85 scores, compared with the all the companies get the high earning in ROA.
Year Maruti Suzuki Mahindra Tata Motors Ford Toyota
&Mahidra Kirloskar
2014 9.08 12.01 06.67 5.14 6.79
2015 11.04 10.08 -9.48 7.82 6.19
2016 12.86 9.02 -0.10 6.91 8.02
2017 14.45 9.11 -4.12 5.83 3.68
2018 13.07 9.18 -1.74 5.83 6.45
Mean 12.1 9.88 -2.95 6.30 6.22
SD 1.85 1.13 3.65 0.94 1.14

SUGGESTION
1. All the companies performed over a period of ten years. They have performance also good and investors can invest their
money in shares of these companies.
2. NPM represents the highest earning from Toyota Kirloskar, which is the best investment out of five.
CONCLUSION
A small investors may not have a large amount of investment. Therefore, he cannot invest his money in different areas.
Therefore, it has a lot of potential to diversify its investments the restrained prudent investor should first try to identify certain
areas and then move on for a comprehensive study of the field. Let’s look at the basics carefully area before making any
investment decision. This paper helps us to know taking a basic look at the automobile sector in India sample of the top five
automobile companies.
REFERENCES
Journals:
1. Dr. M. MuthuGopalakrishnan , Mr. Akarsh P K “Equity Analysis of Automobile Industry in Indian Stock Market”
2. Dr. AnubhaSrivastava, “A comprehensive study of Performance of Indian Automobile Industry- A Stock Market
Perspective”
3. S. Sankeerthana , K. Neeraja “A report on Equity analysis of Automobile Sector”
4. P. Devika, “A Study of Fundamental Analysis of Automobile Companies in India”
Websites:
 www.moneycontrol.com
 www.economictimes.com
 www.nseindia.com
 www.bseindia.com
 www.investopedia.com

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