The previous post has received some serious attention from friends. I must say that all their observations are valid. My attempt was just to raise a voice and debate about this sector and relative valuations. I have not done anything beyond a cursory analysis.
Some interesting points to be considered are:
- M&M consolidated includes a large finance subsidiary- So leverage and cash flow numbers could tell a different story. A stand alone M&M would perhaps emerge stronger;
- Tata Motors- Capitalisation of project costs, development costs etc would impact free cash flow;
- A cash flow analysis would perhaps tell a different story.
- ROEs can change, based on accounting policies.
However, I am not so sure that the broad indicators will be way off. Hopefully, I will follow this up with a detailed analysis of the full numbers .
In the meanwhile, please keep the comments flowing.