MOSL: BOSCH (Neutral)-Revenue below est., PAT in-line-strong growth across Autos and Non-autos

Bosch: Revenue below est., PAT in-line; strong growth across Autos and Non-autos

(BOS IN,Mkt Cap USD8.6b, CMP INR19319, TP INR19280, Neutral)

• Revenue misses estimate: Revenue grew 21% YoY (+2% QoQ) to INR32.1b (below our estimate of INR34.4b), as against industry growth of 25%. Auto revenue grew 17% YoY, while non-auto revenue increased 45% YoY (driven by the energy and power tools business). Domestic revenue grew by 22% YoY and exports by 7% YoY.
• EBITDA margin beat despite higher RM cost: EBITDA grew 43% YoY (-9% QoQ) to INR6.3b (est. of INR6.5b). EBITDA margin expanded 300bp YoY (-230bp QoQ) to 19.6% (est. of 19%). Higher RM cost was offset by savings in staff cost and other expenses. Lower depreciation boosted PAT growth to 42% YoY to INR4.3b (est. of INR4.4b).
• Earnings call highlights: (a) After-market business grew by 8% in the quarter. Management expects double-digit growth in the aftermarket business in FY19. (b) BOS is not threatened by OEMs focusing on self-branded after-market products, as it has a far superior distribution network. (c) In 1QFY19, revenue from mobility solutions grew ~21%, driven by ~27% growth in the powertrain solution business. (d) BOS is acquiring market share with OEMs in 2Ws. 2Ws will play a prominent role in BOS' future growth opportunity. (e) Management does not foresee any threat from electrification as it believes ICEs would continue dominating even beyond 2030.