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Research
Hold Bosch - Quarterly Review - Karvy
Posted On : 2012-05-08 10:00:41( TIMEZONE : IST )
Results closely in line with our expectation
Net Revenue up 10% YoY: : Bosch reported revenue of Rs. 22,950 mn in Q1CY12 as compared to Rs 20,857 mn in the same period last year registering a growth of 10% YoY and 12.5% on sequential basis. The 10% growth in the net revenue is despite slowdown in the automotive industry and sluggish 3% growth witnessed in exports due to slow down in the Europe market which constitutes about 60% of the total exports for the company.
EBITDA Margin stood at 20.8%: The Company's EBITDA margins were higher both on sequential and YoY basis by 330 and 190 bps respectively and stood at 20.8% in Q1CY12 as compared to 18.9% in Q1CY11 and 17.5% in Q4CY11. Margin expansion was mainly on account of a fall in raw material cost and other expenses. Raw material cost as a % of total revenue stood at 54.6% in Q1CY12, as against 56.5% in Q1CY11 whereas other expenses as a % of sales stood at 13.7% in Q1CY12 as compared to 14.4% during the same period last year led by strategic buying, higher localization and effective cost reduction measures taken by the company in the quarter under review.
Outlook: We are bullish on the Company's businesses as we expect traction in the MHCV segment post the recent CRR cut and expect the OEM demand to go up for the company's products compared to some sluggishness in demand witnessed in the previous quarters. Company expects the overall automotive industry to post stronger growth in the first half of CY12 as compared to the second half. Further the company expects that a prediction of good monsoon and falling inflation will improve the tractor sales and the overall automotive segment.
Valuation: Currently, Bosch is trading at 24.8x CY11 EPS and 20.6x CY12E EPS. We have arrived at target price of Rs. 8,600 by valuing Bosch 20x CY12E EPS. We continue to be optimistic about Bosch due to its strong, diversified and near‐monopolistic product portfolio. However, we have “HOLD†recommendation for Bosch as it has crossed our earlier target price of Rs.8600 and we feel most of the above mentioned positives for the company has already been factored in the current market price.