MOSL: BOSCH LTD (Neutral)-Above est-Strong performance with best-ever margins aided by one-offs

​Bosch Ltd: Above est; Strong performance with best-ever margins aided by one-offs

(BOS IN, Mkt Cap USD10.7b, CMP INR23406, TP INR23287, 1% Downside, Neutral)

• Non-autos drives revenue growth, exports continue to decline: Revenue grew ~3% YoY to ~INR25.7b (est. of ~INR27.8b), led by ~17% growth in Non-autos and 4% YoY in Autos. Exports continued to decline, led by China. Autos performance was driven by high-double-digit growth in petrol systems and 2Ws. Non-autos growth was led by the security systems, energy & building solutions and ATMO businesses. FY17 net revenue rose 8% YoY to INR104.3b, led by Mobility (+6%) and Non-mobility (+17%). Diesel contributed 60% of total revenues.
  
• Strong EBITDA margin partly led by one-offs: EBITDA margin expanded 460bp YoY (+17pp QoQ) to 27.3% (est. of 22.3%), led by higher gross margin and lower staff cost. RM cost was lower due to favorable mix, Fx, various cost-saving projects, and long-term commodity contract with suppliers. Also, staff cost was lower partly due to reversal of excess provisioning for restructuring cost of previous quarters. Non-autos witnessed sharp PBIT margin improvement, led by higher turnover, project completion (one-offs) and rental income. Higher depreciation and tax rate restricted PAT to INR4.4b (-7% YoY v/s est. of INR4.3b). FY17 EBITDA margin came in at 18.8% (v/s 19.4% in FY16) and PAT declined 4% to INR14.5b.