Thursday, March 31, 2011

Portfolio Allocation Plan, for the year ahead

We are pleased to suggest the first portfolio allocation plan, for investors who desire a planned approach to investments. The suggested plan is based on the following assumptions:
·         The plan is suggested for investors in the age bracket of 30-45 years
·         The investors are adequately covered for insurance
·         The plan is only for balance disposable income, after providing for recurring household expenses  and EMI instalments
·         The investors pay full tax
·         Consumer Price Inflation – 10%
·         Pre -  tax return expectation – 20%
·         Investment horizon – at least 1 year
The Plan


Asset Class




Direct Equities
In bluechips
Mutual Funds
A mix of large-cap & mid-cap MFs

Fixed Income

Corporate Deposits
In long term cum. NBFC deposits
Long term growth plans of FMPs

Precious metals
Equal split between gold & silver



 Please note that the returns for each asset class are indicative and that there is no guarantee that these may be achieved, over the next one year. The estimation of returns from each asset class and suggested allocation, is based on in-house research of Capital Portfolio Advisors and investment environment prevailing currently. Investors are requested to do their own diligence before acting upon the suggested plan.

Internet start-ups: Another bubble?

“I CAN’T decide what I like poking more: you, or these bubbles,” says bubble-blowing Kim Kardashian, a reality-TV star, in a new application for Facebook (see right). Cameo Stars, the company responsible for this innovation, lets Facebookers send to their online friends clips of minor celebrities mouthing generic greetings. Besides enriching the world’s culture, the firm may also make a fortune. But gloomy types wonder if the profusion of highly valued internet start-ups with lighter-than-air business plans is evidence of a different kind of bubble.
For the first time since 2000, internet and technology entrepreneurs can raise seed capital with little more than a half-formed idea and a dozen PowerPoint slides. “There is probably a bubble in the number of start-ups,” says Alan Patricof, a venture capitalist, though he is not yet convinced that there is irrational exuberance in later-stage valuations.
Yet valuations have certainly risen, especially for the leading firms in this latest, “social” phase of the digital revolution. Groupon, a two-year-old firm that offers group discounts to online consumers, reportedly turned down an offer potentially worth $6 billion from Google, prompting analysts to ask if Groupon’s founders had lost their coupons. A secondary-market auction of shares in Facebook in December had a minimum offer-price 77% higher than the price reportedly paid in a similar transaction three months earlier. Twitter is valued at $3.7 billion, up nearly fourfold in a year. The number of deals with (pre-investment) valuations of at least $100m is also increasing, according to Cooley, a law firm (see chart).

There are differences between today and the dotcom bubble of a decade ago. Then it was initial public offerings that were overpriced. Today, although the IPO market is reviving, it remains a shadow of its former self. Instead, the main way for the owners of a start-up to cash out is to sell their firm to a bigger one, such as Cisco, Google, Facebook or even Groupon. These tech-savvy firms ought to be less gullible than the stockmarket investors of 1999. But their owners may now be so wealthy that they care less about value for money than the coolness of owning the Next Big Thing.
The emergence of an active secondary market in shares of start-ups yet to go public has allowed founders and early investors in firms such as Facebook and Twitter to bank fortunes without waiting for a traditional exit by IPO or acquisition. These secondary-market prices feed hype about what these firms might be worth, were they to list on the stockmarket. Not many shares are available; many punters are chasing them. And those punters tend to be outsiders, such as fund managers and private-equity firms, who may not understand the tech business as well as insiders do.
Then there is the growth in “angel” investing, by rich individuals and small funds that provide seed capital to start-ups too small to interest a venture-capital firm. These angels make many small investments (say, $100,000 a time), in a strategy critics call “spray and pray”. That could certainly account for a bubble in start-ups. One prominent angel, Chris Sacca, has reportedly paused his investing on the ground that valuations have become overblown.
Other investors say this is alarmist nonsense. “For every firm that gets funded at a higher-than-normal valuation, a hundred are getting financed at a normal one,” says Ron Conway, a well-known “super angel” who has invested in many high-profile start-ups. Moreover, many young firms can tap into a thriving online-advertising market that was but a dream when the dotcom boom turned to bust.
Today’s entrepreneurs also have a deeper understanding of the industries they are trying to transform, says Nick Beim of Matrix Partners, a venture-capital firm. Fewer of them are engineers. More are “ambitious non-technologists with a business idea” to change industries such as media, advertising, financial services or fashion. These industries are concentrated in New York, which is why the new boom is as much in Manhattan’s Silicon Alley as in California’s Silicon Valley.
Mr Beim reckons this industry expertise will mean that start-ups in “social commerce”, where there is a clear revenue model from the start, are more likely to succeed than those in social media, where no one knows where the profits will come from even when millions use the service (eg, Twitter). Three of the leading social-commerce firms, Groupon, Gilt Groupe (a luxury-goods seller in which Matrix has invested) and Zynga (a social-gaming firm), are increasing their revenues faster than any start-ups in history, says Mr Beim. That is why this time may be different. Of course they say that during every bubble.
(Source: Economist)

Food Commodities Surge Seen Swamping Consumers With Inflation

Coffee, sugar and cocoa prices will rise five- to 10-fold by 2014 because of shortages that will mean consumers getting “swamped” by food inflation, according to Superfund Financial.
A lack of farmland and rising costs means growers will fail to keep up with demand, said Aaron Smith, managing director of Superfund Financial (Hong Kong) Ltd. and Superfund USA Inc. Commodities account for about 40 percent of Superfund’s $1.25 billion assets under management. Smith correctly predicted record copper prices in November and a month later rightly anticipated that silver would outperform gold.
A United Nations index of world food prices jumped to a record last month, contributing to riots across northern Africa and the Middle East that already toppled leaders in Egypt and Tunisia. Global food security is threatened by “excessive price volatility and speculation,” farm ministers from 48 countries said in a joint statement after meeting in Berlin in January.
“There’s a tremendous shortage of food, there’s a tremendous shortage of arable land,” Smith said in interview in London. “Any kind of food products are going to increase.”
Coffee jumped more than fivefold in the two years through July 1994 and more than tripled from February 2002 to March 2005. Sugar prices rose fourfold from June 2002 to February 2006 and more than tripled from June 2007 to February last year. Cocoa advanced 242 percent from December 2000 to January 2003.

Price Gains

Arabica coffee traded on ICE Futures U.S. in New York almost doubled in the past year and traded at $2.648 a pound yesterday. Raw-sugar futures advanced 52 percent to 27.21 cents a pound, while cocoa rose 0.6 percent to $2,987 a metric ton.
Coffee prices jumped after wet weather damaged crops in Colombia and on forecasts for a smaller harvest in Brazil, the world’s largest exporter. Sugar gained after floods in Pakistan and Australia and cocoa advanced as fighting after elections in November disrupted exports from Ivory Coast, the largest grower.
Superfund, founded in Vienna in 1995, specializes in so- called managed futures, using its own trading system to buy and sell commodities and currency futures, stocks and bonds. It has a 24-hour trading operation in Chicago, Smith said.
The U.S. consumer price index rose 0.5 percent in February, the most since June 2009. Asian countries from China to Indonesia raised interest rates this year to curb inflation. Euro-region inflation quickened to 2.4 percent in February, the fastest in more than two years and above the European Central Bank’s 2 percent limit.
Access to water, higher labor costs and rising incomes are also issues for food commodities, Smith said.

7 Billion People

“There’s about 7 billion people in the world,” he said. “When you have that many people, it only takes tens of millions of people to move up a market that’s so small like sugar.”
World food production will have to increase by 70 percent by 2050 to meet increasing demand from an expanding global population, projected to rise to 9.1 billion by 2050 from 6.9 billion now, Hiroyuki Konuma, the UN Food and Agriculture Organization’s regional representative in Asia, said in an interview in Bangkok on March 9.
Food costs are at “dangerous levels” after pushing 44 million people into poverty since June, World Bank President Robert Zoellick said last month. That adds to the more than 900 million people around the world who go hungry each day, he said.
It’s “an incredibly difficult humanitarian story because the poorest countries will be hit the hardest,” Smith said. “The average person is going to be swamped by food inflation. The new arms race is food and energy.”
An indirect way of betting on food prices is to buy gold, because it tends to do well when inflation accelerates, he said. Gold has gained the past 10 years and reached a record $1,447.82 an ounce last week, while silver is up 22 percent this year at $37.67 an ounce. Gold will climb to $2,000 and silver to $60 in three years, he said.
“I think that gold, and to a lesser extent silver, will dramatically underperform soft commodities, but will at least have a high correlation to them,” Smith said. “When we see short-term rates in the U.S. at double digits then you can start to speculate that gold might be getting close to the end of its run.”
(Source: Bloomberg)

Tuesday, March 29, 2011

Component shortage from Japan likely to hit auto companies by April-May

Domestic auto companies are bracing for the impact of the crisis in Japan on their production, which is likely to hit their local manufacturing operations by April-May this year.
Sources in car market leader Maruti Suzuki and Honda Siel told Business Line that at present production is on track due to an existing stock of parts, though there may be cause for worry when the inventory gets depleted.
Automakers source critical parts such as electronic components from Japanese suppliers, who have either closed shop or have reduced output over the last two weeks following the devastation and power shortage because of the earthquake and tsunami that struck northern Japan.
Maruti Suzuki said that stocks would run till mid-May, as there are also parts in transit from Japan. After that, a lag in production could happen for three to four weeks. The company produces around 5,100 units daily across its two facilities in Manesar and Gurgaon.
“As of now we are fine, but in two weeks' time we expect to have an idea of the impact the component shortage may have. Though we ourselves do not source a lot of components from Japan, we have many Tier II and III suppliers who supply to our main vendors here.
“A shortage on that end may impact our production. There could be a lag of 3-4 weeks production, till Japan picks up. We are also looking for alternate sourcing from Thailand and China,” said the Maruti Suzuki official.
The company, which has an around 50 per cent market share in India, has high levels of localisation of about 85-90 per cent for most models, though this does not account for the Tier II and III supplies. However, SX4 and Gypsy production is likely to be the first to be impacted in case of a component shortage.
Honda Siel, the Indian subsidiary of the Japanese auto major, said that an impact could be felt around May, but it is in the process of calculating the actual levels of shortage. The company imports critical engine parts and electronic components from both Japan and Thailand for models such as the City, Civic and Jazz. The model likely to be most hit is the Accord premium sedan, for which almost 70 per cent of the content is imported.
“We are expecting some impact, but we are calculating the extent of it. We will be fine till the first 2-3 weeks of April as we have inventory and some more components are in transit,” said a Honda Siel official.
On import of completely built units (CBUs), Honda said that future orders for the CR-V from Japanese plants may get delayed, though it has enough stock for current orders. Maruti Suzuki, however, does not expect the CBU orders for the Kizashi sedan from Suzuki, Japan to be impacted.
“Some Suzuki plants in Japan are closed, but it should not impact us. Even if the production for the Kizashi is halved, our order volumes are low, so there will not be any problem in supply,” said another Maruti official.
Recent reports said that the Japanese disaster could lead to a loss of production of around 6 lakh vehicles for global automakers by the end of the month, with more than half the amount already accounted for. More plant shutdowns across the world are expected when the pipeline of parts in stock or transit dries up.

Price pressures

According to an ICRA report, the adverse impact on production is likely over the medium- to long-term. The challenges include disruption in supplies of vehicles and vehicle assemblies, cost pressures arising from appreciation of the Japanese yen, delays in model launches and delays in investment by Japanese players. These would add to existing difficulties arising out of increasing raw materials prices, rise in interest rates and the recently announced increase in customs duty on pre-assembled engine and gearbox or transmission.
Mr Subrata Ray, Senior Vice-President and Co-Head-Corporate Ratings, ICRA, said, “These factors may adversely affect the financial performance of automotive and auto-ancillary players over the short term, given that the OEMs are unlikely to be able to pass on the increase in costs to customers immediately.”
(Source: Business Line)

More for Less: A Stealth Downsizing in US

Chips are disappearing from bags, candy from boxes and vegetables from cans. Nabisco's Fresh Stacks package of saltines, top, contains about 15 percent fewer crackers than the old package.

 Lisa Stauber of Houston keeps careful records of grocery prices. Her 1-year-old daughter, Alianna, is one of nine children.

As an expected increase in the cost of raw materials looms for late summer, consumers are beginning to encounter shrinking food packages.

With unemployment still high, companies in recent months have tried to camouflage price increases by selling their products in tiny and tinier packages. So far, the changes are most visible at the grocery store, where shoppers are paying the same amount, but getting less.
For Lisa Stauber, stretching her budget to feed her nine children in Houston often requires careful monitoring at the store. Recently, when she cooked her usual three boxes of pasta for a big family dinner, she was surprised by a smaller yield, and she began to suspect something was up.
“Whole wheat pasta had gone from 16 ounces to 13.25 ounces,” she said. “I bought three boxes and it wasn’t enough — that was a little embarrassing. I bought the same amount I always buy, I just didn’t realize it, because who reads the sizes all the time?”
Ms. Stauber, 33, said she began inspecting her other purchases, aisle by aisle. Many canned vegetables dropped to 13 or 14 ounces from 16; boxes of baby wipes went to 72 from 80; and sugar was stacked in 4-pound, not 5-pound, bags, she said.
Five or so years ago, Ms. Stauber bought 16-ounce cans of corn. Then they were 15.5 ounces, then 14.5 ounces, and the size is still dropping. “The first time I’ve ever seen an 11-ounce can of corn at the store was about three weeks ago, and I was just floored,” she said. “It’s sneaky, because they figure people won’t know.”
In every economic downturn in the last few decades, companies have reduced the size of some products, disguising price increases and avoiding comparisons on same-size packages, before and after an increase. Each time, the marketing campaigns are coy; this time, the smaller versions are “greener” (packages good for the environment) or more “portable” (little carry bags for the takeout lifestyle) or “healthier” (fewer calories).
Where companies cannot change sizes — as in clothing or appliances — they have warned that prices will be going up, as the costs of cotton, energy, grain and other raw materials are rising.
“Consumers are generally more sensitive to changes in prices than to changes in quantity,” John T. Gourville, a marketing professor at Harvard Business School, said. “And companies try to do it in such a way that you don’t notice, maybe keeping the height and width the same, but changing the depth so the silhouette of the package on the shelf looks the same. Or sometimes they add more air to the chips bag or a scoop in the bottom of the peanut butter jar so it looks the same size.”
Thomas J. Alexander, a finance professor at Northwood University, said that businesses had little choice these days when faced with increases in the costs of their raw goods. “Companies only have pricing power when wages are also increasing, and we’re not seeing that right now because of the high unemployment,” he said. 
Most companies reduce products quietly, hoping consumers are not reading labels too closely.
But the downsizing keeps occurring. A can of Chicken of the Sea albacore tuna is now packed at 5 ounces, instead of the 6-ounce version still on some shelves, and in some cases, the 5-ounce can costs more than the larger one. Bags of Doritos, Tostitos and Fritos now hold 20 percent fewer chips than in 2009, though a spokesman said those extra chips were just a “limited time” offer.
Trying to keep customers from feeling cheated, some companies are introducing new containers that, they say, have terrific advantages — and just happen to contain less product.
Kraft is introducing “Fresh Stacks” packages for its Nabisco Premium saltines and Honey Maid graham crackers. Each has about 15 percent fewer crackers than the standard boxes, but the price has not changed. Kraft says that because the Fresh Stacks include more sleeves of crackers, they are more portable and “the packaging format offers the benefit of added freshness,” said Basil T. Maglaris, a Kraft spokesman, in an e-mail.
And Procter & Gamble is expanding its “Future Friendly” products, which it promotes as using at least 15 percent less energy, water or packaging than the standard ones.
“They are more environmentally friendly, that’s true — but they’re also smaller,” said Paula Rosenblum, managing partner for retail systems research at, an online specialist network. “They announce it as great new packaging, and in fact what it is is smaller packaging, smaller amounts of the product,” she said.
Or marketers design a new shape and size altogether, complicating any effort to comparison shop. The unwrapped Reese’s Minis, which were introduced in February, are smaller than the foil-wrapped Miniatures. They are also more expensive — $0.57 an ounce at FreshDirect, versus $0.37 an ounce for the individually wrapped.

At H. J. Heinz, prices on ketchup, condiments, sauces and Ore-Ida products have already gone up, and the company is selling smaller-than-usual versions of condiments, like 5-ounce bottles of items like Heinz 57 Sauce sold at places like Dollar General.

“I have never regretted raising prices in the face of significant cost pressures, since we can always course-correct if the outcome is not as we expected,” Heinz’s chairman and chief executive, William R. Johnson, said last month.
While companies have long adjusted package sizes to appeal to changing tastes, from supersizes to 100-calorie packs, the recession drove a lot of corporations to think small. The standard size for Edy’s ice cream went from 2 liters to 1.5 in 2008. And Tropicana shifted to a 59-ounce carton rather than a 64-ounce one last year, after the cost of oranges rose.
With prices for energy and for raw materials like corn, cotton and sugar creeping up and expected to surge later this year, companies are barely bothering to cover up the shrinking packs.
“Typically, the product manufacturers are doing this slightly ahead of the perceived inflationary issues,” Ms. Rosenblum said. “Lately, it hasn’t been subtle — I mean, they’ve been shrinking by noticeable amounts.”
That can work to a company’s benefit. In the culture of thinness, smaller may be a selling point. It lets retailers honestly claim, for example, that a snack package contains fewer calories — without having to change the ingredients a smidge.
“For indulgences like ice cream, chocolate and potato chips, consumers may say ‘I don’t mind getting a little bit less because I shouldn’t be consuming so much anyway,’ ” said Professor Gourville. “That’s a harder argument to make with something like diapers or orange juice.”
But even while companies blame the recession for smaller packages, they rarely increase sizes in good times, he said.
He traced the shrinking package trends to the late 1980s, when companies like Chock full o’ Nuts downsized the one-pound tin of ground coffee to 13 ounces. That shocked consumers, for whom a pound of coffee had been as standard a purchase unit as a dozen eggs or a six-pack of beer, he said.
Once the economy rebounds, he said, a new “jumbo” size product typically emerges, at an even higher cost per ounce. Then the gradual shrinking process of all package sizes begins anew, he said.
“It’s a continuous cycle, where at some point the smallest package offered becomes so small that perhaps they’re phased out and replaced by the medium-size package, which has been shrunk down,” he said.
(Source: New York Times)

World short of Gold

A Chennai resident, Mrs Srinivasan, gives the forecast on gold price to Anglogold Ashanti, world's third largest gold producing company. She is the mother of Mr Srinivasan Venkatakrishnan, Chief Financial Officer of Anglogold Ashanti.
“She has been the one who has it right over 80 per cent of the time. She seems to have got an intuitive feel of the price,” says Mr Mark Cutifani, CEO of the company.
Every week Mr Venkatakrishan, who is based in Johannesburg, speaks to his mother living in Chennai for the forecast. Indian families understand issues such as land/gold prices and inflation intuitively, and make wise decisions on when to and when not to buy. “Our conversations are very much around what Mrs Srinivasan sees in the market that many of the global experts do not on gold pricing,” says Mr Cutifani.
On his first visit to India, Mr Cutifani is highly impressed with the knowledge level among Indian consumers. “Indians are very sophisticated. Westerners are realising the need to invest in gold by following the Indians,” said the top official of the $4 billion Johannesburg-based company, which produces 4.6 million ounces (an ounce equals 30.103 gm) a year.
Speaking to Business Line at a resort in Mahabalipuram near Chennai last week, Mr Cutifani dealt on issues ranging from gold production to cost pressure and, more importantly, on shortage of gold in the market. “There is tremendous cost pressure in our industry,” he says. Excerpts from the interview:

World short of gold

At present, the total gold in circulation, or the total global stock above the ground, is 1,60,000 tonnes. If the world's economies grow at 3 per cent a year, it would mean 3 per cent of wealth should be added each year. And that means the industry should produce nearly 4,800 tonnes of gold every year (3 per cent of 1,60,000 tonne). But the production is not even half of that. “The world is short of gold,” he said.

Pricing pressure

The total cost of producing gold today is more than $1,000 an ounce, and that includes exploration, capital development, sustaining capital and other charges. The overall cost is heading towards $1,200 an ounce. But the major problem is the time taken from discovery to producing an ounce of gold is nearly 10 years. The capital commitment is significant and more than that the time involved, of putting a dollar in the ground and getting the return, is very long.

Value destroyed

In the last 20 years the gold producing industry has destroyed the value of the precious metal.
Only in the last two years has the industry seen positive returns, that is, above the cost of capital.
Even today the average returns would not be beyond 10 per cent despite the high gold price. The average production cost is going up by $100 an ounce each year.
There are a few factors on why the cost is going up. As there has been no return for the industry, there have been very few new gold discoveries.
The cost of discovery per ounce of gold has doubled in the last few years even as miners are mining every year 50 meters deeper, thus adding 3-5 per cent to the cost a year. The quality of the deposits has declined by more than 1.5 per cent a year for the last 20 years.
The new mines being developed are located far away, thereby adding to the logistics cost and the cost of providing support infrastructure such as developing new towns, and so on. Finally, the input inflation is at least four percentage points above the general inflation even as the capital items continue to be exposed to high inflation. So, on a real basis, the gold price is going up 10-12 per cent a year while on a nominal basis it is 15-16 per cent. That's what has happened in the last seven years. The pressure on the industry is 10-15 per cent every year and can only be offset by a company's ability to be innovative in its cost structures.
“We are no different from the Tatas on looking to improve productivity and reduce costs.”
The production price of around $1,400 is probably correct and will help the industry get a return on investment of around 10 per cent.
A $100 an ounce increase a year will help sustain that sort of increase but will not encourage crazy amounts into explorations and massive increases in production.
So, the cost of $1,450 an ounce and an increase of $100 an ounce every year is probably the right equation.

Major producers

Barrick Gold is the top producer with 7 million ounces followed by Newmount Mining Corporation (5 million) and Anglogold (4.6 million).
There could be around 20 substantive producers; around 50 small producers and a few individual producers.


China does not have big deposits but many smaller ones, and accounts for around 10 per cent of the world's total gold production;
Australia accounts for 5 per cent and South Africa, 4 per cent. South America is growing and North America is flat.
You could see lots of action in the Middle East and Asia in the next 10 years.

(Source: Business Line)


v  Current price: Rs. 1250/-
v  Target price: Rs.  1650/-
v  Investment horizon: 1 year

The company, promoted by the Lal’s of Delhi, is among the leading automobile manufacturers in the country. It is into manufacture of LCVs, ICVs and HCVs, in the truck segment. It has a JV(VECV) with Volvo Group(which is a world leader in the trucking segment), for manufacture of trucks/buses. It also manufactures 2 wheelers under brand names like Enfield and Thunderbird.  It has manufacturing plants in Chennai, Pithampur,  Thane and Dewas.
Investment Pillars
·          The JV with Volvo has benefitted the company, in the CV/bus segment. It clearly has an edge in technology, over competition
·         Growth drivers : CVs, 2 wheelers and outsourcing opportunities for Volvo
·         Has grown by 56% in the CV space as compared to industry growth of 42% in the 5-12 tonne space
·         CV product mix undergoing a change. LCVs have made way for ICVs, as the mainstay of the company. Currently 70% of the business comes from the ICV segment. Gradually looking to sell CVs, beyond 12 tonne segment, where it hopes to be market leader, with help from Volvo
·         Waiting period for about 7 months, for it’s 2 wheeler products. Demand exceeds supply. Looking at hiking capacity
·          Volvo, looking at VECV, as it’s global sourcing base. The engine outsourcing business to be commissioned from Dec 2012
·         Would now participate in the lucrative bus segment
·         The company is estimated to grow at a pace that is higher than the industry growth. Expects to grow at a CAGR of 18% between CY 10 to CY12. Estimates growth of 29% in 2 wheelers during the same period
·         Undertaking a large capex program to expand capacities: capex of Rs. 500 crs in VECVs over 3 yrs, Rs. 290 crs for engines for Volvo’s global needs and Rs. 200 crs for 2 wheelers. To be funded from it’s existing cash in hand of close to 1200 crs plus
·         To increase number of dealers by 10% in CY11, to 225
·         Witnessing an uptick in margins Return on invested capital at 100% plus, currently.
·         Competition from large competitors like Tata Motors & Ashok Leyland, in CVs. Have strong competitors like Bajaj, Hero group, Honda, etc. in 2 wheelers
·         Success of it’s increasing foray in HCVs, key for the company’s success
·          Operating margins still lower than competitors
·         Inflation in raw material prices, could impact the company. The company, however, has been increasing prices
·         Increasing interest rates could impact demand
Current and future capacities

Current cap.
Expanded cap.
2 wheelers
60000 nos.
150000 nos.
48000 nos.
100000 nos.
CV Gears

Transmission Gears


85000 nos.

Sales split up:
  1. CVs                       70%
  2. Components         5%
  3. Spare parts         15%
  4. 2 wheelers           10%
Key Data Box

(Rs. In crs)

Market Capitalisation
FY12 estimates

Net Profit
% growth in sales
% growth in net profit
Debt equity

Valuation Box

Current price
Estimated FY12 EPS
Book value

We wish to caution investors that the stock is not particularly cheap at the current levels of 1250/-, at about 13.5 times PER on CY11 estimates. However, upside revisions are possible, if the momentum of sales in CVs and 2 wheelers continues. We do believe that there are numerous kickers to the stock. We do believe that it has all the growth drivers in place, implementation of those drivers, are the key. Invest with a longer term perspective, in this novel auto stock.

Disclaimer: The details given above are true to the best of the knowledge of the author. Readers are advised to use their own due diligence before investing in the stock. Readers are further informed that the author and/or his affiliates may have a direct or indirect interest in this recommendation.