Greaves Cotton diversifying business to beat Auto Sector slowdown

Amidst slowdown in Indian auto sector, many auto makers have announced their plans to shutdown factory for few days to cut the existing inventory levels. But there seem to a player catering to Auto sector which is already executing its plan to steer out its business from the slowdown.

Recent slowdown in the auto sector and the expected disruption due to introduction of BS-VI emission norms has not deterred Greaves Cotton which continues to diversify its business to allied areas to remain less affected.

Greaves Cotton has entered into business areas like Manufacturing of Engines for Marine vehicles, Defence and Construction equipment. It has also forayed into sales of vehicle spares and parts. It has also started providing third party after-sales servicing of 3 wheeler vehicles.

Not only the above, it is also betting on the disruptive areas of auto sector like Electric Vehicles. It had acquired over 81% stake in an Electric two wheeler maker Ampere Vehicles for Rs. 120 crore. With this agreement, both the firms plan to leverage each other's synergies. Ampere Vehicles has the technology and platform, while Greaves Cotton has access to Market and large distribution network which can help them grow.

This diversification doesn't appear to be any sudden decision due to recent slowdown. The company has reduced its automotive engine contribution from 60% to 40% over the last 3 years. This transformation has not impacted the company since revenue has grown at an annual rate of over 10% each year and the board is confident on the growth prospects of the organization.

Mutual Fund Pick - Reliance Large Cap Fund - Analysis

Hey friends,

With the beginning of new financial year 2019-20 from April 1st, 2019, I started my search for some good mutual funds to invest in during the coming financial year.

This time I was searching specifically for large cap fund because of 2 reasons:

1. As per Livemint analysis, Nifty 50 grew 14.93% in FY19.
2. While at the same time, BSE Small Cap and Mid Cap Indices saw a fall in 11.57% and 3.03% respectively.

Hence at this point in time, my safest bet would be on Large Cap Funds.

I studied couple of Large Cap funds and found Reliance Large Cap Fund to be decent and good.

Let me tell my analysis on this fund:

1. It's Crisil rank was found to be 5 Stars. This means, this fund has historically performed well hence can be relied upon.

2. If we see the percentage returns compared to Nifty 50 over last 5 years, we find that it had always outperformed the growth percentage compared to Nifty 50. Additionally, the pattern is almost in sync without much deviation. Since Nifty 50 Index is assumed that it will grow well in future, we can also predict that the fund whose pattern is in sync with Nifty 50 would continue to grow in same pattern.

3. If we check the Year on Year returns percentage, it shows that it had consistently given returns close to around 15% and more which is very rare to find.

 

4. On the same above image, you can also find that Annualized Returns of this fund were always higher year on year compared to its category average return percentage. This means fund managers of this fund are doing good job compared to funds in similar category.

Hence overall this fund turns out to be a reliable fund to invest on if you are looking for Equity funds Investment for a longer period of investment time frame of probably 3-5 years. 

This was my quick analysis over this fund. Do you let me know your thoughts on this.

Stock Market Abbreviations - Full forms of key terms

1. NSDL - National Security Depository Limited

2. CSDL - Central Depository Services (India) Limited

3. BSE - Bombay Stock Exchange

4. NSE - National Stock Exchange

5. CNC - Cash N Carry

6. BTST - Buy Today Sell Tomorrow

7. MIS - Margin Intraday Squareup

8. IPO - Initial Public Offering

9. CO - Cover Order

10. BO -  Bracket Order


Some Other Related Abbreviations:

1. ETF - Exchange Traded fund

2. ELSS - Equity Linked Saving Scheme