Buy Bosch; target of Rs 19,795: Sharekhan

Sharekhan's research report onBosch

Q2 EBITDA margins were lower by 160bps than expectations at 11.8%, on account of unfavourable product mix and increase in raw material prices, while business outlook remains boost. Support from the parent company and investment in R&D would be key drivers to tap emerging opportunities in EVs and connected vehicles in India. We expect Bosch’s earnings to clock a 30.8% CAGR during FY22-FY24E, driven by a 20% revenue CAGR and a 230-bps rise in EBITDA margin expansion to 14.7% in FY24E from 12.4% in FY22.

Outlook

We retain Buy on Bosch Limited (Bosch) with an unchanged PT of Rs.19,795, led by a robust demand outlook in the automotive business across segments, access to robust e-mobility technology, and continued focus on improving content per vehicle. The stock trades below its historical average at a P/E of 23.3x and EV/EBITDA of 17.1x its FY24E estimates.

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Bosch - 08-11-2022 - khan