MOSL: BOSCH (Neutral)-Below est; EBITDA margins drop YoY 540bp to 21.9%

Bosch: Below est; EBITDA margins drop YoY 540bp to 21.9%

(BOS IN, Mkt Cap USD8.4b, CMP INR18122, TP INR19291, 6% Upside, Neutral)

• Strong growth in both autos & non-autos: Revenues grew +23% YoY (+3% QoQ) to INR31.6b (est. INR 30b), as against industry growth of 19%.Auto revenue grew 23% YoY, whereas non-auto segment grew 22% YoY. Domestic revenue grew by 24% YoY and exports by 9% YoY.
• Higher RM cost and other expenses hurt margins: EBITDA was flat YoY (+55% QoQ) at INR6.9b (est. INR 7.3b). EBITDA margin declined 540bp YoY (+730bp QoQ) to 21.9% (v/s est. 24.4%), impacted by higher RM cost and other expenses. RM cost was higher due to adverse mix and higher traded goods. Other expenses were higher due to higher packing, freight and consultancy charges for BS6. Lower depreciation, higher other income and lower tax boosted adj. PAT growth to 13% YoY to INR5b (v/s est. INR4.6b).
• FY18 Revenues/EBITDA/PAT grew ~12%/7%/9%. Announced dividend of INR100/sh for FY18 (v/s INR165/sh for FY17, incl INR75 of special dividend).