While Atul Auto generally seems to be doing fine in these tough times, its good to be on top of the situation and examine any declining patterns bottoms-up.
I suspect the 9mFY14 data will be worse for South Zone, esp Kerala. While we are trying to get more granular data from the company fro 9mFY14, as a community we can do 1 better. Local scuttlebutt in Southern markets - Kerala, Andhra Pradesh, Karnataka and Tamilnadu - on general 3Wh situation, and Atul Auto in particular - check with local vehicle financiers - about the situation on the ground - ask average earnings/day, debt servicing capability trends, loan disbursal trends, and NPA trends.
Time for some action here. We cant be sanguine about a developing situation. Tata IRIS/Ace Platforms have started doing very well too!
As far as Kerala is concerned, I noticed two broad trends:
Dramatic increase in cars/SUVs: Over the last 3 to 5 years there has been a dramatic increase in the number of 4 wheelers here. A lot of money has been coming in from the Middle-East and there has been a lot of conspicuous consumption and real-estate activity. Number of shopping malls have grown rapidly in Cochin.
Tata Ace is getting popular: There was a recent program to increase the number of women-autorickshaw drivers (Vanitha Taxi). These are almost exclusively Tata Ace. I traveled by one of these and it is pretty good. The larger versions of these are being used to move school students around - no more cycle-rickshaws.
Hello Donald, Iâm from Kochi, kerala. I spoke to an auto driver who drops my sister to work regularly, according to him things are very very tough now, he had 3 autos he sold 2 and bought Maximo mainly to ferry school children. This is v imp to auto drivers as this provides regular income for them (currently his maximo has 8 school trips daily and auto got 2). According to him below things are impacting 3 wheelers here-
Very tough competition in school segments from 4 wheelers from Tata Iris to Temp Traveller/ Winger (parents prefer bigger vehicle as itâs considered to be safer& cheaper). Now autos are almost out of this segment unless nos of students are less to a particular place/ school/ tuitions. Once his autos used to earn more than 60% rev by moving students.
Tata Iris is permitted to run from auto stand if current driver from a stand moves towards Iris (auto drivers see 3 wheeler segment dying soon and see future in Iris/ or any other 4 wheeler that comes). He uses eg of tata ace/maxximo CV almost killing CV 3 wheelers in kochi city area, rural area 3 wheeler cv is still common but volume is very less to satisfy demands of largde no of CV 3 wheeler(his maxximo also got business of delivering bulk couriers to local cos). Also he says the stand he is plying already has 4 members with Iris (First time Iris buyers who doesnât own 3 wheeler are presently now allowed to ply from any auto stand).
Also, Iâm seeing if any of my friends has any contacts in any of local 3 wheeler financiers so i could get more info.
3214 units in March 2014 vs 3030 units in March 2013 (growth of 6.7%)
This Y-o-Y growth is less than is less than last two month which has been 18+
Could this be due to year end? However was expecting more sales due to elections, lot of men & material needs to be mobilized and transported or could it be other way round that purchases are postponed to next year/post-election?
Another thing is that they come out with Sales number on first day of the month that too in the morning itself (it was up on BSE site @ 9:32!!). Is it possible to collect sales details so quickly from far-flung distributors?
Atul Auto has initiated a budgetary proposal for a new facility in Ahmedabad with an area of about 1,00,000 sqmtrs. This only action initiated on this end is a basic feasibility proposal for the entire Project in terms of costing, Logistics etc. Will have greater clarity by the end of this month.
The location though not confirmed is in an industrial suburb of Ahmedabad.
Did anyone take a look at the recent result announcements? I noticed a red flag which I thought would bring it to the forums attention. It looks like the company has done some aggressive accounting for the quarter. If you notice the balance sheet, the receivables have doubled now from where it was last year. This could be due to pressure in making up the numbers for the quarter by showing more revenue whereas in reality all they did was to dispatch it to dealers without getting paid. Company had previously maintained that it is as good as a cash and carry kind of business but it does not sound like that anymore. This will have impact on the ROIC going forward.This will have some impact going forward unless things really improve on ground to make up for this aggressive revenue booking.
Discl:- Invested but started to bring down my allocation on this one
Hi Ravi! Interesting observation. The volume growth too has tapered off. Unit sold in the month of March-2014 were only 6% higher than March-2013 and unit sold in April-2014 were only 7% higher than April-2013.
However, this is an industry wide phenomenon with almost all four wheeler, two wheeler & commercial vehicle producers facing a slowdown. The only exception was Eicher Motors which is riding high on its Royal Enfield expansion.
Increased debtors is a by-product of low demand. If you believe the new government is going to effect a turnaround in the fortunes of the economy then the auto sector, including Atul Auto, will gain and the debtors issue will be settled over the next few months. My guess is we need to look at the overall industry performance for the next 3-6 months and if it does not show any sign of revival, only then we should exit this stock.
Was looking for Atul auto monthly nos., which donât seem to be out yet.
But if you look for Atul auto on bse site, on the top left corner, just next to Atul auto name there is a orange color small box with â1â written in it. If you click on the orange box, it shows a pop up notification dated 26th May saying âspurt in volumes by 3.05 timesâ, but there is not other info attached to the notification, google also doesnât yield anything. Anyone has info about it ?
I think the notification was for rise in volume on that particular day on BSE. there was transaction of 10.15k and 4.5k shares separately on that day apart from the usual under 5000 share trading volume on BSE⌠Most probably some MF or HNI might have entered the scrip after results and dividend announcement.
