|Ten year period||(2004-05 to 2014-15)|
|Five year period||(2009-10 to 2014-15)|
|10 year sales growth||11.44%||24.78%||28.92%|
|5 year sales growth||13.95%||25.40%||23.22%|
|10 year profit growth||-1.92%||13.00%||27.28%|
|5 year profit growth||-7.92%||4.17%||55.84%|
|10 yr avg ROCE||
|05 yr avg ROCE||12%||19%||21%|
|10 YR AVG ROE||11.00%||20.11%||29.79%|
|5 YR AVG ROE||7.55%||18.69%||34.66%|
|Price to Book||6.33||2.78||2.10|
The above is a snapshot of some numbers of three players from the automotive industry. See the numbers. Are we overpaying for something? And does any one in particular look attractive?
Of course, the risks in each one are different. Ashok Leyland- A dull player, with a mediocre track record.. Will it grow rapidly and profitably to justify the valuations being given by the stock markets? M&M – the darling of the markets- Has a lot of debt on its books, but backed by good ROCE. A downturn can hurt it badly. And Tata Motors, a company whose fortunes now lie outside India. JLR driving the numbers. Solid numbers, but markets do not seem to be convinced.
As an investor, what do you choose? I will certainly not neglect this sector. High growth, consumer spending led is where we should go.
Each company has its story. M&M has become a star. Tata Motors riding on JLR. Leyland not clear about its product baskets or collaborations either. Just walked out of a marriage with Nissan. OK, I am biased, but let the numbers above speak.
You say, let us look at projections? You mean what has not been achieved in last forty or fifty years will change? If you believe in fairy tales…