Hero MotoCorp is looking at right price with right time to take an entry

Already stock market is trading at high valuations but economic growth is not matching. We need to keep ourselves ready for correction. Small Cap investors need to be more cautious. Small Cap investors have earned very high income in past one and half year. Now, time is to either preserve the gain or shift toward more secure counters. 

Time is very ripe to take an entry into Hero MotoCorp at this price. TVS Motor could also be good to take entry but Hero Moto is looking better. TVS Motor has very high Debt.

Current Market price is Rs 2817. In Oct 2020, HERO MOTO has a tie-up with Harley Davidson which will help the company in premium segment later.

The company is trading at PE 18.1 against its long-term average of 19.6. 

Job loss of common people could hurt this company as this is more into entry-level segment. But, auto segment was already into recession here in India for many reasons. Regulatory reason was also there (BS VI).

I think in case of strong market correction, being here is safer than at any other place. Earning potential is also there.

GNA Axles from auto ancillary

GNA Axles is from Auto Ancillary space is looking attractive at Rs 407.

It is a manufacturer of Automotive Axles, Spindles and Other shafts.
It mainly produces rear axle.

It got listed in Sept, 2016.
Established in 1993.

Punjab based company.

Our products find applications across on-highway vehicles (LCV, MCV, HCV and buses, among others) and off -highway vehicles (agricultural tractors and machinery, forestry, construction equipment, defence and mining, among others). We also manufacture solid and hollow spindles used in assembling the axle for various vehicles and equipment.

Products are widely consumed by leading OEMs across globe and in India.

Client concentration is a risk. It got 56% order from top 5 and 74% from top ten clients. Good part is that those clients are established clients. Also, its clients has multiple geo presence.

It also exports its products in many developed countries.

By March 2018, its capacity will increase by 33%. Project cost is Rs 80 Cr. Rs 30 Cr is spent already.

Its credit rating has improved over last three year.

Revenue:

Domestic – 54%
Export – 45%

Capacities:
2.3 million – rear axle shafts,
0.4 million – other shafts,
0.3 million – spindles.


Its products won't be affected by EV vehicle business boost. The products it manufactures are used in all kind of vehicle.

Company supply its products to Commercial Vehicles (CV). Demand in this segment will spur growth. Tractors.
Off-Highway vehicles is the main contributor to its client.

More :
http://www.moneycontrol.com/news/business/stocks/gna-axles-niche-player-tag-immunity-from-ev-disruption-give-it-an-edge-2464379.html


CMP: Rs 407

Proximity to Dry Ports: Nearly 100 % of our exports are routed
through dry ports located at Ludhiana, 60 kms from our manufacturing facilities – giving us further cost advantage.

Bharat Seats from Automobile acillliary

Automobile is a hot sector from few years. Finding a stock from this space is though as valuation is costly in this sector from long.

About Bharat Seats: Bharat Seats Ltd is a joint Venture of Suzuki Motor Corporation, Japan, Maruti Suzuki India Ltd and the Relans for the manufacture of complete seating systems and interior components for the automotive and surface transport.

Net Sales growth for 2017 compared to 2016 is 18%. YoY June 2017 sales growth is 46%. YoY PAT growth is 160%. PAT growth of 2017 over 2016 is 68%.

Debt of Bharat Seats is decreasing. Financial has improved on many fronts.

CMP: Rs 182

Traders and Dealers are going to benefit in GST regime

Automobile Dealers are going to benefit in GST regime! An article here claim so.

There is good news for the importers/dealers as they would be able to claim the GST paid on goods imported/sold whereas currently, they are ineligible to claim the excise duty and VAT paid. Excise paid on stock transfer will be covered by IGST under the GST law. Advance received for supply of goods will also be taxed under GST. GST would help the manufacturers in procuring auto parts at a cheaper cost due to an improved supply chain mechanism under GST.

Tax rate under GST is very supportive of Automobile industry. Tax is far lesser than what was paid earlier. On few companies which were getting huge benefit due to states incentives on Original Equipment manufacturer may not benefit much but overall Goods and Services Tax is very good for Automobile industry.

Competent Automobiles Company Limited is engaged in trading and servicing of Maruti Suzuki vehicles. Can it benefit from GST?

CMP: Rs 187.

Profit Margin is very low. In that sense, you can struck in it too. It is not a recommendation but just a stock came into a category. Check for more.