MOSL: BOSCH (Neutral)-Below est.-Negative op. leverage dents margins-FY20 outlook cautious
Bosch: Below est.; Negative op. leverage dents margins; FY20 outlook cautious
(BOS IN, Mkt Cap USD7.4b, CMP INR17394, TP INR18200, 5% Upside, Neutral)
- Revenues declined 13% YoY (-11% QoQ) to INR27.5b (our est. INR30.5b). Auto revenue declined 16% YoY (domestic auto revenues fell 16.4% while auto exports declined 6.3%). Powertrain revenues declined 19% impacted by diesel, even as gasoline grew in line with the industry. EBITDA declined 25% YoY (-22% QoQ) to INR5.2b (below our est. INR6b). EBITDA margin shrank 310bp YoY to 18.8% (our est. 19.8%) impacted by negative operating leverage. Lower tax restricted the decline in PAT to 17% YoY at INR4.1b (our est. INR4.4b). In FY19, Revenue/EBITDA/PAT grew 5%/3.4%/11.5%.
- Concall highlights: (a) FY20 outlook cautious due to BS6 transition, but growth expected from 2HFY20. It expects OEMs to stop manufacturing BS4 vehicles latest by end-3QFY20. (b) Aftermarket business grew 8-10% in CY18, but, 1QCY19 growth was muted. (c) BOS has ~33% market share in the gasoline business; it is growing in line with industry. (d) Capex: ~INR6b in FY19 and INR5-6b in FY20. (e) For BS6, customer acquisitions (incl. 2Ws) are at an all-time high for BOS (currently working on 150 projects).
Co. is engaged in the manufacture and sale of fuel injection equipment, spark plugs, auto electricals, hydraulics and pneumatic equipment, portable electric power tools, lubricating oil, and spares and components.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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