Another question I found interesting is - Is the increases in primary sales only driven by the dealership addition (40 addedin H1to take the total to 176) and the increase in sales from existing dealership is negative/muted.
Management replied, it takes about 2-4 qtrs. for a newly opened dealership to mature and start contributing. Addition of 40 dealership in H1 will be a good thing for the H2 
Also on another note mgmt. said, vehicle sales are normally slow in last 2 month’s of the year.
hi,
another interesting phenomena is that auto loans spike up in last 2 months of financial year as companies try to take advantage of depreciation. If we draw a corollary here maybe feb-mar could be good months for Atul auto.
regards,
Great updates.
A few other updates were -
a) 80 cr capex for 48000 units. (plant in Gujarat) - whenever this comes up
20 cr capex for 12000 units (plant in SL) - whenever that comes up
Essentially implies, per unit on average, the capex is about Rs.16K-Rs.17K.
Mgmt implied that they have bandwidth to start both at the same time, although SL takes higher priority if permissions come in quickly (they have been trying for this for a long time)
b) With some improvements in the existing factory, they can sweat it for another 10-15% beyond the existing capacity of 48000 units
c) Although the intent is to push in metros, the tone that I read was, they are not too keen/focused on making it big in metros. The language was, we have a lot of potential outside metros than in metros.
Personal view: I expect Atul Auto to a 25% CAGR over FY13 profits over FY14 and FY15 (i.e., end of FY15, I expect Atul Auto to report around Rs. 37-39 cr, if not more). Market price of course is a function of P/E multiple also, which is a personal view.
Disc: Invested. Continue to buy periodically.
Thanks Raj. Though I must say that my question was deftly answered and not answered. They answered only about the service factor.
One more addition to the call points. Mgmt. said that they can squeeze out 10% more production out of the existing plant capacity.
If they are running at 80% cap. utilization, they can theoretically accommodate a 25% volume growth (20/80*100). Practically, most plants don’t run at 100%. With their stated timeline for the next plant, it should become operational by mid CY 2015.
Can they have a production constraint for a quarter or two towards 2015? It might we worth checking with management.
Something interesting to look at -
| FY12 | FY13 | H1FY14 | |
| Revenue (in lakhs) | 29882 | 36384 | 18800 |
| No. of units sold | 27000 | 32040 | 17144 |
| Avg. Price per Unit | 110674.1 | 113558.1 | 109659.4 |
| FY12 | FY13 | H1FY14 | FY14E | |
| Revenue (in lakhs) | 29882 | 36384 | 18800 | 40869 |
| No. of units sold | 27000 | 32040 | 17144 | 37269 |
| Avg. Price per Unit | 110674.1 | 113558.1 | 109659.4 | 109659.5 |
One more point, they took a small price hike in Sep (a small one, as per mgmt., not sure of %tage).
@Kunal, I think your question was a very tricky one 
Let me mention it here for benefit of others…
You asked (not verbatim), What is working in favor of Atul Auto vis a vis it’s competition among these the following 4 things - Service, Initial Price, product specification, cost oflifetimeownership for the product.
Mgmt. tried to explain that being in the business they have to be competitive in each of these 4 factors and then of course went on to explain that they have been in the business for 30 years etc etc…
| Conference Call from Capital Market |
| Atul Auto |
| In FY 15, the company plans to do 50K units in sales |
|
|
| Atul Auto held a conference call on 01 November 2013. Niraj J Chandra, Whole Time Director, took the queries of the call.
Key Points of the call:
|
Is there any likelihood of Greaves Cotton increasing its prices of engines for Atul in view of its loss in the Sept quarter? Would Atul have the bargaining power in such a case?
As all the other players also buy their engines from Greaves, i don’t think it should be an issue.
Raamdoe Agarwal buys 1,00,000 shares @ 260 in personal name. Check bulk deals on NSE site.
http://www.nseindia.com/products/content/equities/equities/homepage_eq.htm
What is most interesting is that Vijay Kedia MD of the seller - Kedia Securities Pvt Ltd., is aDirector of Atul Auto Limited. Kedia Securities sold 175,000 shares, out of which 100,000 were sold to Ramdeo Agarwal and 75,000 to an entity called Osag Enterprises LLP. I think (& this is pure guesswork) the name Osag is a combination of Oswal and Agarwal.
aDirector
You can read an interesting interview with Kedia which inter alia talks about his entry into Atul Auto here:
India Investment Partners Ltd. A/c. ICGQ Ltd., a UK based FII, managed by Mr. Sanjoy Bhattacharya picks up 1,60,000 shares @ 265 today.
Today the promoter Jayanti Chandra has sold 129342 shares out of close to Rs. 62 lakh shares that the promoter group holds.
Two insiders selling down in last 2-3 days.
Disc - continue to be invested.
Will be interesting to watch how this goes. At least one of the buyer (Sanjoy) and seller kedia I believe are really smart. So fingers crossed, drawing no conclusions.
Sorry for the typo. That was 62 lakh shares and not Rs. 62 lakh shares.
You are correct aboutOsag is a combination of Oswal and Agarwal.
aDirector
From Vijay Kedia’s interview (http://www.business-standard.com/article/companies/no-academic-degree-can-guarantee-success-in-stock-mkts-vijay-kedia-112101100166_1.html)
“…I donat decide when to exit when I enter. I exit when I need money to invest somewhere else, or I feel that the price is unrealistic…”
What is driving him to reduce the stake in Atul Auto at this juncture, when it is looking towards further capex and expansion.
Hi Rudra, at the end of Sept 2013, he owned 20.695 lakh shares in Atul Auto.
Out of which he has sold 1.75 lakh shares only in the bulk deal, may be because he is sitting on too much profits and he may have found another investment opportunity.
To put this in perspective the qty sold seems to be less than 9% of his holdings.
Forum members - any one has a clue as to what he is buying now?
Kedia however is very positive on the future prospects of Atul Auto,
http://autocarpro.in/contents/technologyDetails.aspx?TechnologyID=101
