Dear All,
Forwarding you the Result Update on Bosch India for 1QCY2011 with a Neutral recommendation.
Bosch reported robust results for 1QCY2011, better than street as well as our expectations. Performance was driven by sustained momentum in the automotive industry, especially the commercial vehicle (CV) and tractor segments, and reduced employee and depreciation expenses. In our view, margins are likely to remain under pressure, considering the near-term macro headwinds.
We maintain our Neutral recommendation on the stock.
Better-than-expected top-line growth aides overall performance: Bosch reported robust 30.7% yoy and 10.7 qoq top-line growth to `2,086cr, aided largely by increased revenue of the auto segment, up ~32% yoy and 15.2% qoq.
The company’s revenue in the diesel systems segment grew by ~37% yoy. The automotive aftermarket segment reported a ~23% yoy increase in sales during the quarter. On the operating front, EBITDA margin came in 253bp ahead of our estimates at 18.9%, down 21bp yoy, on account of input cost pressures. Noticeably, a sharp 339bp yoy decline in employee expenses restricted the margin contraction. However, on a sequential basis, operating margin improved by strong 249bp. Led by strong top-line performance and a significant increase in interest income (up 86% yoy), net profit posted better-than-expected 35.5% yoy and 30.3% qoq growth to `274cr during the quarter.
Outlook and valuation: We estimate Bosch to post EPS of `305.6 and `344.1 for CY2011E and CY2012E, respectively, owing to the anticipated healthy growth in auto demand. However, we expect profitability to remain under pressure due to rising commodity cost pressures. At `6,644, the stock is quoting at 21.7x CY2011E and 19.3x CY2012E EPS, respectively. We maintain our Neutral recommendation on the stock.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6864 / 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6864,6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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