Hi Ayush,
What is the price difference between atul’s products and Bajaj’s products?
Thanks
Excel
Atul Auto Sales for August 12 is 2322 vehicles against 2051 in August 11. 13.21% growth.
April to August 12 sales at 11692 against 9866 previous year. 18.51% growth.
Atul Auto september sales increased 8.6% from the same month last year.
http://www.moneycontrol.com/livefeed_pdf/Oct2012/Atul_Auto_Ltd_011012.pdf
apparently, the growth is slowing down. good time to pick stock in my opinion as long term story remains intact. Moreover it is available at very decent valuation.
Best Regards
Dhwanil Desai
So, we have 7693 vehicles sold this quarter v/s 6794 in Q212. So 13.2% YoY growth.
Long term View- Great performance when most auto makers are showing -ve growth.
Short Term View- REDUCE. Why? Q213 can be worse than Q212 & hence stock can correct after results. Sales growth 13%; But Shares increased 25% (rights issue shares; For bonus ones- stock price corrected) & 2Q12 margin was also good which should be difficult to replicate.
What say Hitesh, Ayush & others?
So, we have 7693 vehicles sold this quarter v/s 6794 in Q212. So 13.2% YoY growth.
Long term View- Great performance when most auto makers are showing -ve growth.
Short Term View- REDUCE. Why? Q213 can be worse than Q212 & hence stock can correct after results. Sales growth 13%; But Shares increased 25% (rights issue shares; For bonus ones- stock price corrected) & 2Q12 margin was also good which should be difficult to replicate.
What say Hitesh, Ayush & others?
Hi,
I think the nos are good if we look at the Sep month - they have done 2727 vehicles vs around 2300-2400 in last few months (aug and before). Also we need to look at the industry slowdown too. I think the longer term story remains very much intact.
On the negative, for FY13, the growth estimates may need to be scaled down to say 350-360 Cr and hence there may be limited upsides over short term.
Ayush
Atul Auto gears up to turn national player
Any update on foray into 4W LCVSegment
i found this guy aspresident of Green field 4W LCV project “https://www.facebook.com/pradip.chaudhari.5492”
TWO RECENT CORP ANNOUNCEMENTS-
Proposing setting up subsidiary in Sri Lanka-
http://www.bseindia.com/xml-data/corpfiling/AttachLive/Atul_Auto_Ltd_291012.pdf
NSE listing proposal:-
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=a7752894-cd2d-4d95-9420-520736f01366
Hi,
Oct sales nos at 3332 compared to 2520 of Oct 2012.
Fy13, 7 month figure at 17751 compared to 14897 same period FY12.
Cheers
Vinod
Yup, fantastic sales for this month. They seem to be back on the high growth track.
In subdued market, sales growthlooks very decent. I hear that Bajaj Auto has increased three wheeler prices by 3-5% effective last month. May be Atul also would have increased the price. In my opinionatul auto isoneof the best structurally strong growthstory at cheap valuations.I wasreading Shreeram Transport MD’s interview post q2 results,wherehe is very bullish on demand for loans in rural area for 3 wheelers and LCV especially in the price rangeof 1-2.5 lakh.STFL is well entrenched into the business and I feel it provides good pointers in terms of structural story unfolding.
Best Regards
Dhwanil Desai
The growth of 3 wheeler loan portfolio of Muthoot Cap which has strong presence in some of the states like Kerala where Atul is growing also points to the same conclusion.
In the long term good upsides in sales could be seen with the Srilankan planmaterializing. Atul should have a first-mover advantage there provided the import duty stays like it is now. Till then domestic growth should see us through 
Cheers
Vinod
Hi Folks,
It had been quite some time, that I partook in the wonderful intellectual conversations and debates that take place here.
I had been thinking about ATUL AUTO for quite some time( would you believe it, I first earmarked it for research in its 70s), around Nov 2011). Some of the things that turns again and again in my mind, is that, its a small player in terms of market share, has no contracts with its key OEM suppliers and it wont be wrong to say, it will be the first casualty in a price war among giants (TVS,Bajaj,Piaggio).
Where is the differentiator really? Better maintenance, lesser breakdowns, and longer warranty are all positives no doubt, but is it enough?
From a business economics pov, its ROCE is just picking up and who knows what the next year might bring? If it turns higher or stable ROCE then no doubt , it will be termed as a great pick as it is sure to appreciate in value but what if it doesnt?Market rewards consistency, and it is a good virtue I feel.
Food for thought!
Soham
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Atul Auto’s results are pretty decent in this subdued environment. Even though, 15% growth in topline, PBT before exceptional item has increased by 36% from 6.31 crores to 8.6 crores. Apparently they have managed costs well which has resulted into higher margins as well.
http://www.bseindia.com/xml-data/corpfiling/AttachLive/Atul_Auto_Ltd_101112_Rst.pdf
Another interesting thing that happened is to their balance sheet. NWC has shrinked dramatically due to improvement on all fronts. A/P has increased, inventory in absolute term has decrease inspite of increase in sales and A/R has reduced drastically. NWC has reduced from 21-22 crores to 1 crores. This means cash generation. Their cash+ current investment has increased dramatically from 11 crores to 39 crores.
Overall very encouraging result and at this price remains a great buy.
Best Regards
Dhwanil Desai
Soham,
As mentioned by the company sectary during a telephonic interaction, the differentiating factors are
1). mileage - 32 to 35 kmpl as against Piaggio’s 28 to 30 kmpl.
2). 8 months manufacturer’s warranty + 16 months extended warranty as against Piaggio’s 6 months warranty
3). low cost of maintenance and lesser breakdowns (no figures to substantiate this claim)
Regards
Meet
@Dhwanil Yes indeed the results had been quite an interesting one. The lesser working capital requirements have directly reflected in the free cash flow. I didnt include investments but I found the bottomline(Owners Cash Earnings or Free Cash Flow, only difference being one is precise the other is vague) varying roughly about 16-19crores.
@Meet, Yes, I do agree that mileage is better,warranty is longer, after sales is great, reliability,convenience etc etc. But is it enough?Say Bajaj comes in and says, flat 20% cut in prices of all autos from tomorrow.
Soham
Hi Soham,
I have the same thought’s as yours, like what does it take for the industry leading players to improve the mileage, increase the warranty etc…and why would they not do it if the market share keeps going away from them.
However, Bajaj’s (market leader) operating margins (which is one of the highest in industry) is roughly at 20%. And going by Rajiv Bajaj’s philosophy, he is not very keen to reduce his margins as he thinks it’s point less to fight on price. So, i don’t see a 20% price discount coming from the likes of Bajaj’s and if it does come, definitely not to continue for a long period. Unless they do some improvement in their cost structure to reduce the manufacturing price itself.
Regards
Raj
Thanks for giving that update regarding Bajaj, and thus we can be sure one of the big players will stay out, of a price war-if there will be any. However, I was not pointing to Bajaj specifically, but a big player in general.
I was thinking over this last night, and it got further enhanced after I posted here. I think, with reasonable confidence that there will be no price war. My logic is two pronged and slightly convoluted[And I think, unknowingly I applied Charlie Munger’s idea of applying mental models while thinking of problems]
Henry Kissinger, was a foreign policy realist.He believed that a world where each country was singlehandedly resolutely trying to serve their national interests will be a world more peaceful. {But what has this got to do with investing! A bit of patience,my fraaaand} He argued, that in such a world everyone will know what is the other party’s agenda and will modify their own actions accordingly.Each country will try to extract the maximum out of the other, all the while ensuring their demands are within the capacity of the other nation. They will follow what he said- “Push your interests as much as you can, and no further!”
In the case of AAL and auto rickshaw space, with complete transparency about each others margins, I believe that no player will follow a scorched-earth policy, because any player trying to initiate a price war will hit his margins. And with razor thin margins anyone to participate in it will be a loser.So there will be minor price cuts and adjustments, each knowing fully well how much maneuvrable space there is for the other company.
So the question is, why FMCG companies go for price wars? Wherever there is brand involved with high margins(not only number wise but also quality wise, i.e the number of inventory turns) in specific areas, there will be price wars.
These all are my beliefs and please take them with a pinch of salt.