Thanks. Looks like flat to low single digit growth. Few reasons I can think of
On a slightly different note not related to investment that is a tragedy as we will only have the Indian brands plus a little bit of Honda and Hyundai.
That to car lovers with not a load of money is sad for Maruti undoubtedly sells some of the worst cars in the world.
Note: On a side note if the per capita income of India were to rise rapidly Maruti will have the biggest problem as they have very limited knowledge of making real cars (above 15 Lakhs or so).
@Mods - Please remove if required.
Nothing much to read in slowing car sales growth. Its a worldwide trend. https://www.team-bhp.com/forum/international-automotive-scene/201799-car-sales-slowing-down-worldwide.html
There are several reasons that come to mind:
#1 High fuel prices. in 2013 also auto sales had fallen when oil went up.
#2 People waiting to buy electric cars. I am one of them. Driving a 10 year old car but don’t want to buy another petrol/diesel car.
#3 Reduced need. Wifey always wanted a car. Last few years because of Uber she now says she has no need for one.
#4 Doorstep delivery. We get supplies from amazon, milkbasket and food delivered from zomato.
I used to love driving but now it seems like a chore. I guess that’s how most people in cities feel about driving now.
It is the first time in India smartphone market when all top brands strengthen its quarterly performance. The India smartphone shipments in Q3 2018 grew 24% Q-o-Q and 5% Y-o-Y , indicating a sizeable number of mobile phone users in India are upgrading to smartphones.
I have been thinking of writing this for more than a month. But the reason I delayed it was because I wanted to live through what I planned on sharing. And now that I have followed my thought process for more than 2 months, I am penning it down.
Let me start with some points that we already know. But it is good to be reminded of them anyway:
So, what helps me get through such times:
Excellent Post!! I think, majority of us have been going through these times for the last few quarters and I firmly believe, if nothing else going through these times will strengthen our resolve, ponder over our mistakes honestly and appropriately position oversells for the next up swing. I guess, one great learning for me in these times is not to be a preening duck during bull run. This would catch the attention of one’s friends/relatives. And, I have noticed that with half baked knowledge about stocks/investing, they start punting on all and sundry. At the end of the day, when they notice that most of their stocks are in red/going to incur permanent losses, they vow to themselves not to return to stock market again in their life time. During bull market, investing appears to most as one of the most easiest ways of “minting” money on a daily basis (where as its the time when one should remain extra cautious and lie low). During tough times, investing is the most shunned away activity and you hardly hear about it from any one around you (and exactly the time, when one should go all out).
I think the conundrum is solved by analysis of the sales data. Manufacturers book sale when they bill to the dealers and this data shows MoM and YoY figures, whereas the ET article as well as the articles below talk about secondary sale by the dealers to the customer. If the news reports are right, much of September/October sale may now be lying as dealer inventory.
I think that clears the mismatch between company sales data and news article figures.
and
Agree with you, I have entered the market when the tide was lifting all boats and I have seen profits, my PF was almost green. Like you said, it all looked easy. When the tide started turning, I could the overpay resulting in losses. But I am lucky to have seen rising and falling in less than a year, the losses taught me lessons, they still do. I understood that if you have done your research well, you should be buying when they fall and not shut the door, so learning bit by bit, day by day.
The sub-head line reads: “sanctioned home loans are not being disbursed”. Now this is definitely a very serious issue!
But when you read the article, not a single NBFC that has failed on sanctioned disbursement has been named! Not one! Article use words like “various players”, “they”, “them”. This type of reporting goes against the very basics of journalistic ethics and amounts to fear mongering!
I would like to know if any of the top 10-15 HFCs (HDFC, SBI, LICHF, HUDCO, ICICI, PNBHF, CANFIN, GICHF, IndiaBulsl, Repco), has failed to disburse a sanctioned loan.
This Is the very thing, I am trying to avoid. This is what I wrote in my detailed comment 3 days back and this TOI article is a prime example on why news/views should be avoided!
Interesting viewpoints, however, I have a different view.
Generally speaking, CV industry lags passenger cars industry by 3-6 months. Hence low car sales might be early indicators for CV demand going down in future. Also, we need to remember, passenger car sales growth was strong last year and hence growing on high base might be tough. While Metro, Ola/Uber do impact car sales, my view is their impact is not very significant (<20%). The dip has to do with the combined impact of the car price increases this year due to a substantial increase in raw material (steel), Insurance regulation change and higher oil prices. Going forward I see a benign situation for passenger cars, hence better demand as steel and oil prices take a breather. However, the same factors that impacted passenger cars might impact CV industry and they might feel the heat in near future.
Disc: Ex-Maruti employee and currently working in CE (Construction Equipment) industry
There has been a aggressive push by Tata motors in terms of new models & aggressive pricing. Resiprocal response by competitor sucking out future demand. Demand is never infinite.As most of the demand has to be created by marketing & some demand is created by low interest. credit cycle turning making that factor negative. More over Indian automobile sector has been in a relentless boom for over decade being reflected in maruti, mahindra. Bajaj & Hero honda… Need to see what have the manufacturers got in their pocket to entice or expand export portfolio
Thank you for sharing. Mr Raamdeo has hit the ball out of the park. The above 2.5 hour video is mandatory watching for anyone investing. All those things that many of us felt intuitively but maybe did not understand very well are clearly explained. And he is being highly rational. Delight to watch and learn from.
Very insightful with lot of data points, thanks for sharing.
He says that he only just realised that maintaining high growth rates for 15-20 year period is almost impossible for any company. That’s quite ordinary I guess because he should be knowing that all along.
One thing I guess some people are not coming to terms with yet is that maybe markets are going to remain at high-PE forever, because if the growth is absent in long term, then most likely, inflation rate would also be very low and same for the interest rates.
I think comparing market PEs for the past with PE ratios in the present context may not be accurate.
Hi @vicky_7900,
I think if we put things in a long context we understand this better.
It would have been impossible for him to know this in advance. We are all students of the market (in fact he says this quite early in his presentation) and our Indian markets are quite young. He is not god, and we should not expect him to have known all this in advance. The gentleman is just another human being trying his best to learn. He is surely more knowledgeable than us, but he is still a student nonetheless and open about admitting it. He has also spoken quite frankly about how even his own analysts have been assessing, and have forgotten trailing PE and only look at forward PE that too 2-3 years down. I think he is learning and because he is open minded, he is evolving. That is a good teaching for us as well. To not have very rigid thoughts and be open to knowledge as it comes to us.
He gave another very interesting tidbit that the Sensex was never 100 
It was actually constructed backwards in 1986 and the Sensex was assumed to be 100 based on way too many changes from 1979 (when it never existed). He says, the Sensex basically went up 6-7 times in 7-8 years before the actual date when the Sensex was available as what we know it. So from there the returns are more like 13% PA. Makes a huge difference if the starting price of the Sensex was 100 or 700 when we look at data. Now, when we look at 13%, we also had periods of very high inflation at that time. If I remember correctly the bank FD interest rates used to be around 18% PA. Imagine if we get them today 
. So again, returns are a mix of growth and inflation. Now that inflation is quite controlled, what should be our returns going forward? That is a big big question. It has the power to change valuation as we know it.
On your main question, if he did not know in 1990’s or 2000’s it is actually quite true. Why? Because we did not have that many listed companies, and we have seen much of them in existence only for the last 25 years. Before that, it was mainly MNC’s and Indian operator stocks. Very few genuine Indian businesses. If you look back, Infosys, HDFC Bank et al, are all listed from mind 1990’s. Yes, there were some good stocks listed earlier, I understand that, the quantum is much higher since mid 1990’s. The Indian corporates coming to the market is also co-related to allowing FII investments in India which I think was opened in 1993. So if he is now making this co-relation, it makes sense because he is not using 5 years or 10 years history as a benchmark.
From history, Reliance was the stock which bought in the first wave of retail participation. That is literally the point where regular Indians got interested in the stock market. Before that, very very few had any relation to the stock market except for the brokers and punters who were mostly found around exchanges in Mumbai, Kolkata and a few other exchanges in India. In fact, broking was not considered a noble profession and it is only in the last 20 years and more so in the last 10 years that brokers and investors have gained prominence.
We all always feel what has happened recently is all there is to know. Actually there is so much more to learn and know. For example, today we can simply enter a few ratios and get a screen (thanks to screener.in). This data was never available to retail till just 7-8 years ago! and maybe a rare few took decisions on the basis of actual data.
Retail did not even know what is ROE, ROCE, CROIC etc. Now we are learning and that is great.
Now for example, we are learning how important behavior is in stock markets. This knowledge was unknown. Everyone simply said, markets cannot be timed, and whoever heard this on TV, repeated it, without knowing why they are repeating it. Now we know, it is not timing, but getting a general grip on undervaluation or overvaluation. That is the essence of what we call market timing. I am sure this will also evolve over time as we go along as behavior will ensure many people become cautious once markets and stocks are expensive and buy without fear when markets and stocks as a result are undervalued. So this edge, behavior, which till last year was not well understood will also slowly disappear. We will be looking for new edges. Although, I don’t think behavior as an edge will disappear this year There is more learning left for many before it becomes mainstream thinking.
There is still hero worship of promoters; there is still deep convictions without a care for valuations. This will take time to become common knowledge. Our market is still driven on tips. The thing is, members of VP are learning all this, it is not every retail investor, so there is a long way to go.
On your thinking that maybe now stocks will remain expensive or at high PE forever; see, it is possible right. That is a given. Is it probable? That is where the bet is. Probability is low as far as I am concerned.
Reason? I will share a small example and then a personal secret. Only for you
Lets say, you are given 1 crore and told you can invest it only in buying a business. Nothing else. So, you go around the market and check who all have a business to sell. Now, everyone businessman is in a positive mood about the future, and they are generally positive, so they keep telling you if you want my business pay me 1 crore, and that business will give you cash flow (take home or reinvest but not capex as that is a running expense) of 4 lacs.
Now you come home, and you think. Ok, if I buy this business, I will lay out 1 crore and then I will get 4 lacs in FCF. Whereas if I go right now to a bank, I will be paid 8 lacs a year and not have to work in the business. So really, should I not be getting more than 8 lacs (could be 9 or 13 lacs based on your opinion) to actually have to work in the business and risk your capital? And keep my capital liquid for when business people ask me for a fair price to buy their business? That is why I think these PE ratios cannot sustain. Today if you buy the Nifty 500 you will get around 3 lacs per year per crore in cash flow. You will do better in a bank FD right?
Now the secret I personally use; I one day (just 2-3 months ago) sat long and hard and wanted to come to a conclusion that what is my job as far as allocation of my free cash goes? I realized, my job is not to become a stock market investor. My job is not to become a FD investor. My job is not to become a private business investor. My job is not to become a real estate investor.
My job is to simply allocate my current and future capital to what promises the best return at that moment with the least risk. Even bank FD has risk
So then, I was freed of investing in stocks at all times. I was freed of investing in FD’s all the time and the likes. I became free to allocate capital to what makes the most sense at a point in time. That has become my base for taking a decision when allocating my cash.
So do I think valuations or PE’s will come down? I don’t know and I don’t need to think about it. I only need to know, I have better risk adjusted return in an FD right now because the other asset (stocks for example) is not offering the best risk adjusted return. My life becomes very easy. If the markets become more attractive risk adjusted, I will allocate to stocks or indexes.
Other that that, I like to enjoy the time I have on this planet. Who wants to be 88 and in their last breath thinking, all I did is only make money. I have so many other things to do!
Hope this helps.
Yours humbly.
FII/FPI can’t hold more than ~10% of Indian debt iirc, for our macro stability concerns. While equity, they can hold 100% in various cases. So, imho, earnings yield for the 2 is not exactly comparable. FII can’t own Indian debt more than 10% even if they find it super-exciting. Compare our equity valuations with world wide equity valuations.
As per Ramdev, TTM PE is 21 n going lower as earnings are improving. Maybe 1 year frwd earnings yield of 5.5%
On your FD, you have to pay 30% tax so you get only 70% of 8 =5.6%. and that too, in long term going to go down and down.
Compared to 2008 crash, India’s M1, M2, M3 monies have become ~3.5x today…so if that’s any measure of local liquidity for our stock market, the base should also shift 3.5x from 2300 (2008 nifty low) which comes at arnd 8000. Basically if we were at 8000 today, you would say that we are equivalent to 2008 lows wrt. How M1,M2,M3 monies have grown.
I will have to say this one is my final answer for the moment Vaibhav. Rest I am sure I will learn in time. If I am mistaken, I will learn where I made a mistake 
So your question;
Well, quite frankly, I do not live in India. So I am not taxed on my FD’s. Sorry, that’s the benefit of being an NRI 
Anyway, even resident Indians can get returns Tax free. I am not a specialist because I have not had to use them, if you have a financial advisor he will be able to help you. You can buy tax free government bonds. They are as safe as they come and are tax free and you get close to 8% to my limited knowledge.
If as you believe, interest rates will come down, then the bond prices will rise, so you will get some alpha even.
I don’t believe interest rates will come down, I don’t believe interest rates will go up. I simply can act on what happens. My skillset as you might know by now is very very limited. I am just unable to predict all these very important things
