Bosch Ltd (Q3 CY13)

India Infoline News Service | Mumbai |

Largely led by lower tax rate, PAT at Rs3.2bn came in 1.3% ahead of our estimates.

CMP Rs8,855, Target Rs9,824, Upside 10.9%
  • Bosch Ltd reported a decent quarter in terms of sales growth and profitability wherein it grew its net sales by 4.8% yoy, and expanded its operating profit by 19.5% yoy. Revenues at Rs21.1bn came in line with our estimates, led by robust growth of 19.4% in exports driven by steep rupee depreciation. On a business segment basis, automotive revenues, the predominant chunk of Bosch ltd’s top-line registered a growth of 3.1% yoy. The non-auto segment revenues grew by 14.3% yoy. 


  • Margin performance was largely steady with OPM at 15.2% indicating 187bps improvement on yoy basis. However on a qoq basis there was a decline of 55bps. This decline was largely attributed to increase in other expenditure. On a yoy basis total raw material costs (RM + purchases) as a percentage of sales reduced by 263bps yoy. This the company attributed to recent cool off in commodity prices and better product mix. Personnel costs were higher by 123bps yoy as a percentage of sales as the company raised salaries and wages in line with inflation.


  • On the segmental EBIT performance, automotive EBIT margins moved down sequentially to 14% from 15.4% in Q1 FY14. On a yoy basis the margins were higher by 337bps. Non-auto segment margins improved on a sequential basis from a negative 0.2% to 2.4% but were starkly lower when compared to 6.6% in Q2 FY13.


  • Other income was lower by 16.5% as the company earned lower income in the form of dividends from subsidiaries. This was offset by 8.5% fall in depreciation expense. Tax rate came in lower at 27.6% and the company has guided for a range of 27-30% for CY13.


  • Largely led by lower tax rate, PAT at Rs3.2bn came in 1.3% ahead of our estimates. Going ahead, Bosch Ltd continues to keep its focus on investments to prepare for the emission cycle change and maintained its capex guidance of Rs6bn in the current year.


  • We have cut our estimates to factor in the slowdown being seen across most auto categories. However, we maintain our BUY recommendation as its strong parentage will help it maintain its monopoly in the Indian diesel FIE business. Its improving its localization content and is already putting in huge capex to remain most competitive with the Indian OEM’s and stave off future competition. Monopoly position, high return ratios, focus on localization and a parentage having a very strong R&D pipeline make us confident of sustenance of Bosch Ltd.’s dominance in the Indian market. Additionally continual march towards stricter emission norms will structurally drive up earnings.

Cost Analysis
As a % of net sales
Q3 CY13
Q3 CY12
bps yoy
Q2 CY13
bps qoq
Material costs
32.2
34.8
(263)
31.6
61
Purchases
21.7
22.4
(71)
23.6
(191)
Personnel Costs
13.3
12.0
123
13.3
(1)
Other overheads
17.7
17.4
24
15.8
185
Total costs
84.8
86.7
(187)
84.3
55
Source: Company, India Infoline Research

Result table
(Rs m)
Q3 CY13
Q3 CY12
% yoy
Q2 CY13
% qoq
Net sales
21,499
20,517
4.8
23,070
(6.8)
Material costs
(6,921)
(7,144)
(3.1)
(7,286)
(5.0)
Purchases
(4,660)
(4,592)
1.5
(5,440)
(14.3)
Personnel costs
(2,854)
(2,472)
15.5
(3,065)
(6.9)
Other overheads
(3,798)
(3,577)
6.2
(3,648)
4.1
Operating profit
3,266
2,732
19.5
3,630
(10.0)
OPM (%)
15.2
13.3
187 bps
15.7
(55) bps
Depreciation
(894)
(977)
(8.5)
(864)
3.4
Interest
(0)
(1)
(57.1)
(1)
(62.5)
BSE 19,849.70 269.65 (1.38%)
NSE 19,927.30 377.05 (1.93%)

***Note: This is a NSE Chart

 

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