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Saturday, October 31, 2009

Competent Automobiles Company Ltd:Buy/hold/sell,potential,growth prospects,analysis and recomendation

Scripscan:Competent Automobiles Company Ltd

Story:Competent Automobile is a part of the Delhi-based competent group. This company is primarily a dealer of Maruti Udyog Limited; it is one of the largest dealers in the country and probably the largest dealers in Northern India.This company has got seven showrooms out of which five are in Delhi and two are in Himachal Pradesh. Besides the seven showrooms, this company has got five authorised service centres of Maruti; three in Delhi and two in Himachal Pradesh.Besides the dealership of Maruti this group has got interest in the construction business and hotel business. The construction company of the group has made several landmark buildings in Delhi which include the Intercontinental Hotel in Connaught Place, Hotel Sofitel Surya in New Friends Colony in Delhi and World Trade Centre and World Trade Tower in Connaught Place. Also, the hotel group of the company owns hotel Holiday Inn in Manali.This company has also acquired about 21 acres of land in Goa which is a prime land, sea-facing land for a total consideration of about Rs 10.5 crore. This land was acquired about 3 and half years back and the company has plans to make a five star hotel in Goa.In the core business, which is a Maruti dealership, this company is focusing very much on the service part of the business where the margins are much higher than the sales business.The points which go in favour of this company is that Delhi has got the highest population of motor vehicles and cars amongst all metros. And Maruti being the largest selling out of all the companies which manufacture cars, augurs well for companies like Competent Automobiles.Given the fact that the company is getting into the hotel segment and given the track record of the group in the construction of hotels, I think they have capability to make the hotel in record time, within the scheduled time.The market value of the land which they acquired in Goa, 21 acres of land which they acquired, at about Rs 10.5 crore, which is close to about Rs 50 lakh per acre for 21 acres, as per the market sources that land has also appreciated significantly. So the stock currently trades at a market cap of just about Rs 22-25 crore and it looks grossly undervalued at these levels.

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