Saturday, February 21, 2009

Invest in Indian Auto companies now and make MONEY

Auto sector has been doing pretty bad for at least a couple of years now. Last year was a disaster as we all know. My investments in Maruti and Tata Motors, which were made in 2007 when I thought that they were cheap, went down 50% and 90% resp in 2008. Maruti has come back well but Tata Motors is still down 80%. I did not look at the auto companies for quite some time now but with the interest rates coming down there is hope that the bad ends are about to end.

With the hope that this could be the right time to get in so that I am in before the stocks run up too far I decided to take a look at some of the auto companies. It became quite clear after a quick look that I have already missed the bus with some of the frontline stocks. Here are some of the numbers

Maruti Suzuki is up 50 % from its 52 week in December, Bajaj Auto is up more than 50% its 52 week dec low and Hero Honda, which has outperformed the whole of last year, is around its 52 week high. The case of Hero Honda shows that a good profitable business is what it matters and not the sector. These were the outperformers and other like Mahindra & Mahindra, TVS and Ashok Leyland are up 20 odd %. The only frontline company that missed this bus is Tata Motors and the reasons are pretty well know so its hovering around its 52 week low.

Performance has been good only for the auto companies but not the ancillaries. Exide Industries, Amara Raja and Shanthi gears are around their 52 week lows, maybe its time to get in them so not to come back in few months time and find them 50 odd % up.

As far as I am concerned there is n't much downside in autos at the moment so I will put in some money and see where it ends up at the end of the year.

RK

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