Valuation Study and Market Timing Strategy for Stocks in Indian Automobile Industry

AN INTERIM REPORT

ON

“VALUATION STUDY AND MARKET TIMING STRATEGY FOR STOCKS IN INDIAN AUTOMOBILE INDUSTRY”

EXECUTIVE SUMMARY

This project has been the great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. This project as a whole deals with the automobile industries in India .i.e. the history of automobile industries in India, Features of automobile industries, role of government in the development of automobile industries in India and valuation and analysis of major companies in automobile industries.

With the invention of the wheel in 4000 BC, man’s journey on the road of mechanized transport had begun. Since then he continually sought to devise an automated, labour saving machine to replace the horse. In 1769, the very first self-propelled road vehicle was a military tractor invented by French engineer and mechanic, Nicolas Joseph Cugnot (1725 - 1804). Since then automobile industry has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization.

At present companies like Tata motors, Maruti, General motors, Hyundai, Hero Honda, Ashok Leyland, etc are well known for their high tech and complex motor vehicles in India. But in order to produce such high tech motor vehicles and to run the day to day expenses of the company, these companies need capital. The company can raise the required capital either through debt or through equity.

Debt financing means company borrows money from various investor and financial institution. Equity financing means raising money by issuing stocks i.e. company sells its ownership interest in exchange of funding. Most of the companies enter the primary market to raise money from the public to expand their businesses. They sell their securities to the public through an initial public offering. After trading in the primary market the securities will then enter the secondary market or stock exchange...