Competent Automobiles Co. Ltd :- Proxy play on Maruti’s growth:

Dear members

Glad to post new stock analysis from Automobile /trading sector.

Fundamentals are awesome, should be in portfolio for long term, I will add slowly 15-20 stocks every month in portfolio.

COMPETENT AUTOMOBILES CO.LTD
cmp :- 277

(SCRIPT CODE :- COMPEAU)

BSE CODE :- 531041

COMPANY PROFILE :- 

• Incorporated in 1985, Competent Automobiles Co belongs to a group of diversified companies with a group turnover of Rs 360 cr. It has been promoted by Ram Chopra, who has practical, industrial and business experience of over 20 years. Its major group companies include Competent Construction Company, Competent Exporters, Competent Film Enterprises and Competent Hotels Division. The Board is chaired by Raj Chopra, who is also the Chairman & Managing Director of the Company.

• Competent Automobile, which is primarily a dealer of Maruti Suzuki in Delhi, Haryana, and Himachal Pradesh (HP). The company also holds some land in Goa and other states.
• The top-line performance of the company is closely linked to the performance of Maruti Suzuki (MSIL). We expect MSIL to post robust volume growth in the domestic market going ahead on back of new launches which will be replicated by Competent. 

• Also, we expect the market share of the company to remain stable/improve, as entry of a new dealer seems to be commercially unviable with property prices having soared significantly in the Delhi region. Further, higher vehicle sales would likely get converted into greater demand for after sale services, thus bringing in additional revenue for the company. Scalable business model with healthy balance-sheet: The company has a scalable business model which will enable it to report sustainable revenue growth going ahead. The company has increased its short term debt ahead of the festive season mainly utilizing the funds for inventory. 

• We expect the debt level to return to normal levels by the year end. Outlook and Valuations: We believe that Competent will continue to benefit from its established position in the automobile dealership market in Delhi, Haryana, and Himachal Pradesh, and from its conducive relationship with its principal, MSIL.

• Competent Automobiles Co. Ltd. is mainly in the business of trading and servicing of Maruti Suzuki vehicles. 
• The Company operates in two segments, namely, Showroom and Services & Spares. 
• The Showroom segment deals with purchase and sales of vehicles manufactured by Maruti Suzuki India Limited. 
• The Service and Spares segment includes servicing of Maruti vehicles and sale of their spare parts. 
• For Segment wise business performance of the Company, please refer to note no. 36 in the notes to financial statement forming part of the annual accounts. 
•  As on 31st March, 2017, there were 1762 employees on the payroll of the Company

KEY FUNDAMENTALS :- 

Stock Info
Market Cap	170.34 Cr
P/E	2.08
52 W High/Low	171 / 334.95
Face Value	10
EPS	133
Book Value	186.69
Price/Book Industry PE	1.48 48.93

Share holding PAttern
Promotors	74.92 %
FII	--
DII	--
Public/NII	25.08%
TOTAL	100%

Trendlyn Score of the company :- 

Mojo Score of the company :- 

Moneyworksforme Score of the company :- 

Dividend History of the company :- 

QUARTERLY RESULT :-

 

Other income of the company grew 78.77 Cr, due to Competent completes sale of Goa land for total consideration of Rs 105 cr.

The company had initiated the process of selling the land in March 2014 and had received Rs 35 cr as advance for the sale. Initially the company intended to set up a 5 star hotel at the location but owing legal issues, the same could not materialize.

As far as the company’s core business is concerned, it has a total of 17 Maruti Suzuki showrooms across Delhi, Haryana and HP and has 13 workshops, which generates service income. 

As for FY17, the company generated Rs1,087cr from sale of vehicles. During FY17, the company sales of Maruti Suzuki vehicles jumped 7% yoy to 24,100 units.

The company might utilize the proceeds to grow the existing business or may reward the shareholders with a dividend. The current market cap of the company is Rs 170 cr and the company had cash balance of Rsv29 cr as on 1HFY18. Post the sale, the company’s cash would reach Rs 99 cr. 

Apart from the cash balance, the company has investment in Raj Chopra & Company Pvt Ltd. which is one of the investors in Marriot in Uttarakhand.

ANNUAL RESULT :- 

•  Competent Auto is profit making company from its establishment.

• Company constantly generates revenue and slowly growing.

• Due to sale of Goa Land in H1FY17, FY 18 Annual result will see big jump in net PAT and EPS.

• Company continue posting profit of 7.3 CR in 2009 to reach 19.72 CR. in FY 17.

BSE RESEARCH REPORT ON COMPETENT AUTO  :- https://www.bseindia.com/download/Research_Report/Report/531041/2017-18/Competent%20Automobiles%20Co%20Ltd%20Q1FY18%20by%20VFCS.pdf 

How Company will go in Future :- 

• The company is mainly in business of service and trading of Maruti suzuki vehicles.

• Means if Maruti sales growth increases, ultimately the company sales growth also increases.

• In near future Maruti will launch New Maruti Suzuki WagonR launch by Diwali 2018.

• Upto 2018 end Maruti will launch New models like Maruti Ciaz 2018, Maruti Ertiga 2018, Grand Vitara, Maruti Jimny.

• Competent Automobiles Co. Ltd. owns 17 maruti suzuki authorized Show rooms and service centers across Delhi, Chandigarh, Himachal and Hariyana. 

• Maruti Suzuki ended 2017-18 with its highest ever total sales of 1,779,574 units, a growth of 13.4 per cent. This comprises highest ever domestic sales of 1,653,500 units. The export sales were 126,074 units. The growth has been a substantial one, year-on-year  and in the domestic market it self the company registered a 14.5 per cent growth. This is all thanks to the launch of two new-generation cars by the company, the Maruti Suzuki Dzire and the Swift.

• Maruti Suzuki India Limited is believed to have accelerated its Gujarat plant (aimed to make the plant as the most evolved plant of Suzuki Global) with which is scheduled to start production (first assembly line will likely produce 250,000 units) in early 2017 with a second assembly line (another 250,000 units) which would be commissioned by 2019.

• Top 7 selling car are from Maruti.

• Maruti holds 50% market share

Recent News :- 

• Competent Automobiles Company Ltd has opened a new NEXA Showroom at Plot no. 63-70, Mohit Nagar, Dwarka Road, Dwarka, Delhi, on April 13, 2018.

• Competent Automobiles Company Ltd has purchased a Land to build its Workshop for NEXA units for a consideration of Rs. 20 crores (approx.) at 34, Rajasthani Co-operative Industrial Estate, G.T. Karnal Road, Delhi - 110033. ( February 8,2018)

Why to invest in Company :- 

• Being the only listed dealership of Maruti, it can be considered a good proxy for the growth witnessed by the country's largest passenger vehicle maker. Maruti's sales in the domestic market went up by 11 % to 1.17 million units in the year ended March 2015 to 13 % to 1.65 million units in the year ended March 2018. 

• In the same year, Competent saw a volume increase of 14 per cent, selling 20,066 vehicles through its multiple showrooms in Delhi, national capital region (NCR) and Himachal Pradesh. Competent is not Maruti's largest dealer. The tag is enjoyed by Cochin-based Popular Vehicles.

• The Competent group also diversified into hotel business in India. Its first five star hotel was commissioned in, April 1994 in Manali, Himachal Pradesh under the name Holiday Inn Manali which has franchise agreement with the 'Intercontinental Hotels Group, USA 

• The top-line performance of the company is closely linked to the performance of Maruti Suzuki. We expect Maruti Suzuki to post robust domestic volume growth of 18.1 per cent in FY19, which will be replicated by Competent Auto also.

• During FY17, the company sales of Maruti Suzuki vehicles jumped 7% yoy to 24,100 units.

•  Also, we expect Competent's market share to remain stable or improve, as the entry of a new dealer seems to be commercially unviable due to high property prices in the Delhi region.

• The story of Competent is as old as Maruti. Competent happens to be Maruti's first dealer, set up in 1983 at Delhi's Connaught Place.

• Trading at PE 2.08 against industry average PE of 48.

• Regular Dividend paying company.

• consistent profit making company.

• Proxy play to growth of Maruti.

Verdict :-

•  If any investor can't invest in Maruti Suzuki stock due to its high price, they can invest in proxy stock.

• The day by day Maruti stock and growth increases, than Competent Auto company growth also increase.

• The stock can touch 500,600 levels in 3-4 years.

P.S. :- Already holding stock from 240 levels, one can check fundamentals by own as my views may be biased due to self investment.

Happy Investing

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This is a personal blog and presents entirely personal views on stock market for only education purpose. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible. 

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NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN. 

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”