20 May 2021
4QFY21 Results Update | Sector: Automobile
Bosch
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
BOS IN
31
467.1 / 6.4
16900 / 9100
14/20/10
2170
CMP: INR15,838
TP: INR15,850
Neutral
Above estimates; strong traction in revenue continues…
…but margin recovery yet to happen due to higher traded content
Revenue continued to grow faster than underlying industry growth in
4QFY21. While the current situation will impact demand in the near term,
we expect growth to rebound faster on account of strong Tractor demand,
addition of the 2W segment, and higher content. The stock price largely
reflects all the negatives, but there are no major re-rating catalysts on the
anvil.
We cut our FY22E EPS by 4% to account for near term challenges, while
maintaining our FY23E earnings estimate. We maintain our
Neutral
rating
with a TP of INR15,850 per share.
Financials & Valuations (INR b)
Y/E March
Sales
EBITDA Margin (%)
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
FCF Yield (%)
FY21 FY22E
97.2 121.4
10.0
17.3
9.9
13.7
335.4 463.0
-20.6
38.1
3,331 3,669
10.4
12.2
66.2
47.2
4.8
0.7
1.1
13.2
17.5
27.0
34.2
4.3
0.8
0.2
FY23E
136.6
21.6
16.7
Stronger revenue growth in both businesses, but margin falters
565.9
Revenue/EBITDA/adjusted PAT grew 44%/35%/13% YoY in 4QFY21 to
22.2
INR32.2b/INR4.6b/INR3.5b. The same in FY21 declined ~1%/32%/21% YoY.
4,105
Auto revenue grew 47% YoY, driven by 65.6% growth in Powertrain (driven
14.6
19.3
23.0
28.0
3.9
0.8
2.5
Shareholding pattern (%)
As On
Mar-21 Dec-20 Mar-20
Promoter
70.5
70.5
70.5
DII
16.2
15.7
13.1
FII
4.3
4.6
7.5
Others
8.9
9.1
8.8
FII Includes depository receipts
by both volume and content) and growth in the 2W business. Non-Auto
revenue grew 25%, led by growth in the Power Tool segment.
Gross margin declined 750bp YoY (-340bp QoQ) to 38.6% due to changes in
the product mix (higher traded goods), BS-VI, and higher inward freight
cost. Operating leverage restricted adjusted EBITDA margin, which fell
100bp YoY to 14.3% (est. 15.3%).
Reported staff cost was lower by ~INR1.58b due to one-time reversal of
wage settlement/retirement benefit for employees who were part of the
restructuring exercise. Adjusted for the reversal, staff cost stood at INR2.9b.
PBT before EO grew 33% to INR4.8b (est. INR4.6b). Adjusted PAT grew by
13% to INR3.46b (est. INR3.2b) as the base quarter had a tax reversal.
It declared a final dividend of INR115/share for FY21 (v/s INR105 for FY20).
Outlook:
The demand situation in India remains uncertain due to a localized
lockdown, supply chain issues, and unavailability of oxygen. The
macroeconomic indicators can be compared to Jul’20.
BOS’ parent is the largest suppliers of e-drive, e-axle, and power electronics
(inverter and converters). Its current order book exceeds USD20b. In India,
it would like to replicate its similar success across segment from low voltage
(2W/3Ws) to high voltage (PVs/CVs). It expects the Indian market to be
dominated by ICE engines (~80% till CY30), with 2W/3W to be the first
disrupted.
The management reiterated that any electric vehicle-related business will
be part of the listed entity, including fuel cell technology for CVs.
After successfully navigating to BS-VI, the next emission milestones involve
transitioning to TREM5 (for Off-Highway engines), adoption of Café Norms
(Phase II), and BS-VI (Stage-2).
Highlights from the management commentary
Jinesh Gandhi - Research analyst
(Jinesh@MotilalOswal.com)
Vipul Agrawal - Research analyst
(Vipul.Agrawal@MotilalOswal.com)
11 August
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
1
Motilal Oswal
2020
Investors are advised to refer through important disclosures made at the last page of the Research Report.