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Detailed analysis of Automobile industry which is

gearing towards international standards . Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and Mahindra and Mahindra through fundamental analysis. Suggesting as to which companys shares would be best for an investor to invest. To understand stock market. To understand stock market.


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The Automobile industry in India is one of the largest in the

world and one of the fastest growing globally.

It is the world's second largest manufacturer of motorcycles,

with annual sales exceeding 8.5 million in 2009.

According to recent reports, India is set to overtake Brazil to

become the sixth largest passenger vehicle producer in the world.

By 2050, the country is expected to top the world in car volumes

with approximately 611 million vehicles on the nation's roads.

Fundamental analysis
Fundamental analysis attempts to find out the fair

value of a securities.
Fundamental analysis is the study of economic,

industry and company conditions in an effort to determine the value of a companys stock.
It is also known as Economic-Industry-Company

approach (E I C APPROACH).

Economic analysis is the analysis of forces operating in the

overall economy of a country. It includes Gdp, Recession, Inflation etc.

INDUSTRY ANALYSIS- Industry analysis involves

reviewing the economic, and market factors influence the way the industry develops.
COMPANY ANALYSIS- Company analysis is to identify

better performing companies in an industry


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Till 2008 TATA and Maruti had a rising EPS but in 2009 both of them fall and the effect is more on Tata motors because of the slump in domestic and international markets and sharp fall in sales and net profits which resulted in low EPS.Till2008, Mahindra also had a

rising EPS but it declined in 2009.But Mahindra showed an increasing trend in 2010 &
2011.As trend shows Mahindra motors has potential so a shareholder can expect better in future.


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Tata motors and Maruti Suzuki both the companies showed a positive

trend in paying dividends till 2008, but the scenario changed in 2009 as both the companys dividend per share fell. According to graph 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 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.


140 120 100 80 60 40 20 0 MAR8 MAR9 MAR10 MAR,11 MAR,12 TATA SUZUKI MAHINDRA


DIVIDEND PAYOUT RATIO Dividend payout ratio is the percentage of

earnings paid to shareholders in dividends. It provides an idea to an investor of how well earnings support the dividend payments. Till 2009, Maruti has maintained a stable payout ratio. DP ratio of TATA & MAHINDRA have declined till 2008 but both of them showed a positive trend in 2009. Both TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher payout ratio.

FINDINGS 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.In 2011,only Mahindra showed a positive trend. The return on investment has been fluctuating since 2007 and the year 2011 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 2011. The three companies have witnessed a low price earnings ratio in 2008 compared to the previous year. 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.

Earnings per share has declined drastically. It has reduced

its dividend per share from rs.15 in the previous year to rs.6 in 2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor. Marutis return on investment is not higher as compared to mahindra.Its Dividend per share is also low . Mahindras Return on Investment is much higher compared to TATA and Maruti. The dividend per share is rs.11.50 in 2011, which is higher amongst the three companies. The company has potential to grow. It would be the best option for the investor. As Mahindras shares are undervalued, the investor can buy these shares. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment .

Global recession had a dampener effect on the growth of

automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favoring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving. This has happened due to a lot of positive factors like Friendly and favorable government economical policies. Rise in per capita income (individual). Rising Middle Class and Working Class ( higher buying power). Availability of Easy Finance Schemes for purchasing Automotives.