Embed Size (px)
Citation preview
Sector: Auto Ancillary
Sector view: Positive
Sensex: 19,577
52 Week h/l (Rs): 9,590 / 8,182
Market cap (Rscr) : 27,966
6m Avg vol (‘000Nos): 6
Bloomberg code: BOS IB
BSE code: 500530
NSE code: BOSCHLTD
FV (Rs): 10
Price as on July 01, 2013
Company rating grid
Low High
1 2 3 4 5
Earnings Growth
Cash Flow
B/S Strength
Valuation appeal
Risk
Share price trend
80
90
100
110
120
130
Jun‐12 Oct‐12 Feb‐13 Jun‐13
Bosch Sensex
Share holding pattern
‐
20
40
60
80
100
Jun‐12 Sep‐12 Dec‐12 Mar‐13
Others Insti Promoter
%
Rating: BUY Target (9‐12 months): Rs10,324
CMP: Rs8,885
Upside: 16.2%
Company ReportJuly 02, 2013
Research Analyst: Naman Jain Prayesh Jain
Initiating Coverage
Bosch Ltd
Driving technology breakthroughs
A technology leader Bosch Ltd, a subsidiary of Robert Bosch GmBH, has dominated Indian markets for diesel fuel injection systems. The success has been on the back of global dominance of the parent, which has made sustained investments in R&D and evolved the fuel injection system technology. Using this parentage, Bosch Ltd has garnered 81% market share in diesel systems. Best play on change in emission norms Four‐wheeler emission norms for the top 13 cities are set to change from CY15 from BS IV to BS V. This will largely require a shift to electronic fuel injection technology. In 2003, when norms were changed from BS II to BS III, Bosch Ltd saw a material jump in realizations and margins. A similar impact on revenues and profitability can be expected in 2015 as the company is infusing Rs12bn over the next couple of years as capex and also increasing its localization content. Expect resilient financial performance In spite of weakness in the domestic automotive industry, we expect Bosch Ltd to register a strong profit CAGR of 16.5% during CY12‐15E. The strong performance will be on the back of robust margin trajectory and support from replacement and non‐automotive revenues. From H2 CY14, we expect gradual recovery in OEM business and CY15 will see benefits from change in emission norms. Return ratios are likely to remain flat as impact of higher profitability is offset by investments in capital expenditure. Premium valuations justified Over the years, Bosch Ltd on back of a sustained strong performance even in automotive downturns has commanded premium valuations. Its monopoly‐like position in the fuel injection system business, robust cash‐flows and strong balance sheet has enabled it to trade at an average 1‐year forward P/E of 25x over the past two years. These valuations are at a substantial premium to other large auto component players, which trade in the range of 10‐18x 1‐year forward P/E. We believe, the premium valuations are justified and value the stock at Rs10,324 (25x CY14E EPS of Rs413). Initiate with a BUY rating. Financial summary Y/e 31 Mar (Rs m) CY12 CY13E CY14E CY15E
Revenues 84,172 92,926 104,989 117,248
yoy growth (%) 6.2 10.4 13.0 11.7
OPM (%) 16.0 16.8 17.0 18.0
Reported PAT 9,583 11,212 12,967 15,166
yoy growth (%) (14.6) 17.0 15.7 17.0
EPS (Rs) 305 357 413 483
P/E (x) 29.1 24.9 21.5 18.4
Price/Book (x) 5.0 4.3 3.7 3.2
EV/EBITDA (x) 19.7 16.9 14.4 11.8
RoE (%) 18.6 18.6 18.6 18.7
RoCE (%) 25.2 25.6 25.7 26.1 Source: Company, India Infoline Research
Bosch Ltd
2
Fuel injection system is the heart of the engine: Highly specialized product FIE, often referred to as the heart of the engine, plays a major role in its performance, emission and reliability. It plays a critical function of injecting a metered quantity of fuel, at a predetermined time and in a predetermined manner. Major advances in the development of diesel engines have been driven by superior fuel injection technologies developed over time. The system broadly consists of a high pressure pump, which compresses the fuel (for better combustion) and an injector system, which injects it inside the combustion chamber of the engine. The pressure to which the stored fuel can be atomized relates to efficiency and combustibility of the fuel. It remains a highly specialized product with Bosch being the world leader supplying to majority of OEM's from a century. Source: Wikipedia, India Infoline Research
Fuel injection Systems: Leading the way
Leader in diesel fuel systems with over 81% market share in India Bosch (Robert Bosch GmbH) has been a worldwide leader in Diesel Fuel injection technology (FIE) for over a century. Starting from mechanical systems (Inline, distributor pumps) the technology has come a long way to electronic diesel injection (Common rail, Unit injection) and Bosch has remained at the forefront in all the major inventions. Bosch Ltd, the Indian arm, since its inception in 1951, has fully leveraged the strong parentage and has developed expertise in diesel FIE in the Indian market. It has garnered over 81% market share in the diesel systems with supplies to majority of OEMs present in the 4Ws (CV and PV) and farm equipments space. We note the other major supplier of FIE systems in Indian market is Delphi Systems.
How the technology has changed globally and in India? Technology progressing from mechanical systems to electronically‐controlled systems has enabled much greater control over the combustion process. The modern systems use an electronic control unit (ECU), which controls the injectors on the basis of data from various sensors.
Starting from mechanical systems (Inline, distributor pumps) the technology has come a long way to electronic diesel injection (Common rail, Unit injection) and Bosch has remained at the forefront in all the major inventions
The pressure to which the stored fuel can be atomized relates to efficiency and combustibility of the fuel
Diesel systems dominate revenues Among the vehicle categories, CV's majorly drive revenues
11%
47%23%
7%
12%Auto electricals
Fuel injection equipment
Injectors, Nozzles and Nozzle Holders
Portable electric power tools
Others
55%15%
20%
10%
CV
Tractors
UV/Cars
Non Auto
Source: Company, India Infoline Research
Bosch Ltd
3
Such a modern technique, named as Common Rail System (CRS) was commercially developed by Bosch in 1997 and introduced in European passenger cars. In this technique, the capability to which the fuel can be pressurized was much higher than the conventional systems enabling better combustibility and fuel efficiency. This system contributed in making diesel cars cleaner, more economical and less noisy than ever. Post introduction, it proved to be hugely successful and the share of diesel cars in Europe rose sharply to 30% in 2000 and 50% by 2005 underlining its acceptability. In India, Bosch has been a leader in FIE systems. It introduced the CRS technology for passenger cars in 2006 and it has been able to replicate much of its global success with majority of diesel cars now on common rail technology. However we note, the CV category has lagged the technological changes, with majority of vehicles still using conventional mechanical systems. Stricter emission norms ahead will force the penetration of superior diesel systems (CRS/other advanced systems) in CVs In India, the emission norms change with a lag of five years to the norms prevalent in European countries. The typical reason for the lag, being the technological change driving up the prices of vehicles, thereby affecting the automotive industry growth. In a two‐tier emission norms system, the top 13 cities of India require BS IV compliance currently with rest of the nation requiring BS III norms for 4Ws. Tighter norms ahead will phase out the conventional mechanical systems Standard Reference Date Region
India 2000 Euro 1 2000 Nationwide
Bharat Stage II Euro 2
2001 NCR*, Mumbai, Kolkata, Chennai
2003 NCR*, 13 Ci es†
2005 Nationwide
Bharat Stage III Euro 3 2005 NCR*, 13 Ci es†
2010 Nationwide
Bharat Stage IV Euro 4 2010 NCR*, 13 Ci es†
Bharat Stage IV Euro 4 2015E Nationwide
Bharat Stage V Euro 5 2015E NCR*, 13 Ci es† Source: Wikipedia * National Capital Region (Delhi) † Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Sholapur, Jamshedpur and Agra
Bosch’s offerings in injection systems Method Injection pump/mechanism Emission std
Mechanical
Single cylinder PF BS I
Multi cylinder PE BS II
Distributor BS III
Electronic Distributor (EDC) BS III
Common rail BS IV Source: Company, India Infoline Research
While majority of diesel cars have shifted to modern injection systems (common rail) and are BS IV compliant already, large chunk of CVs on Indian roads are BS III compliant. This is because majority of CVs are registered in non‐metro cities, barring the few registrations of state transport units.
In Common rail, the capability to which the fuel can be pressurized was much higher than the conventional systems enabling better combustibility and fuel efficiency
In a two tier emission norms systems, the top 13 cities of India require BSIV compliance currently with rest of the nation requiring BSIII norms for 4Ws
Bosch Ltd
4
We note that conventional mechanical and EDC pumps have been modified to meet the BS III compliance in India. However, going ahead in 2015, as BS V gets introduced in top 13 cities and BSIV goes nationwide, adaption to CRS or some other mode of modern electronic injection would be inevitable in our view. The emission norm change would hasten this process and lead to up‐gradation in diesel technology used in CVs. M&HCVs: Segment will open to technologies like common rail Customer insights: Lower cost of ownership will change the perception While the cars picked up the common rail technology faster, the CVs lagged. From our discussions with various stakeholders, we learn some of the key reasons for customers being slow on accepting modern electronic injection‐based vehicles are 1) inability of the local mechanics to repair the modern systems, forcing the customers to OEM service centers, 2) inability to change the wiring of the engine (customization), which is a widespread practice and easy to do in mechanical systems. However, with better fuel realization, we note this trend is changing at dealer levels where the focus is more on the total cost of ownership. Additionally, OEMs are putting up trained mechanics to repair the modern engines with a focus to change the customer perception around the repair costs. OEM insights: Switch to electronic injection is inevitable With discussions with some of the OEMs, we strongly believe that the stricter emission norms will continue to drive the technology changes in CVs. We note already in many LCVs (Ashok Leyland's Dost, Tata Motors Ace) common rail systems are installed. In MHCV categories, however, the penetration is miniscule with common rail systems only present in the modern trucks (ALL’s U‐trucks range, Tata Motor’s Prima range among the majors). Going ahead, we expect this trend to pick up and we learn, that majority of newer platforms by OEMs are based on the modern electronic injection methods. Our discussions indicate that it is not feasible beyond a point to continue with the conventional mechanical technology as stricter emission norms ahead will require a higher pressure requirement. The conventional mechanical systems when stretched can go up till ~1,200bar while common rail allows much higher pressure alternatives. With a nationwide switch to BS IV compliance due in 2015, adaption to some mode of electronic injection may become inevitable in CVs. Fuel availability has remained a key constraint for timely implementation of emission norms in the country. However, majority of refineries have made investments and upgraded their facilities to supply BS IV fuel, and we do not build in major delays in implementation.
Going ahead, adaption to CRS or some other mode of electronic injection would be inevitable in our view
While the cars picked up the common rail technology faster, the CV’s lagged
With better fuel realization, we note the current perceptions are changing at dealer level where the focus is more on the total cost of ownership
We learn, majority of newer developments by OEM’s are based on the modern electronic injection methods Our discussions indicate that it is not feasible beyond a point to continue with the conventional mechanical technology as stricter emission norms ahead will require a higher pressure requirement
Bosch Ltd
5
Higher common rail penetration would imply higher realizations and better profitability for Bosch Ltd The common rail technology is a much more specialized and high realization product (~2x). Currently the penetration levels of these systems in M&HCVs are at a meek 1% levels, and higher penetration here would drive in superior growth both at top‐line and bottom‐line.
In CY04‐05 when the emission norms changed, a major technological change was required and distributor pumps were introduced over the conventional single and multi cylinder pumps. The technological change reflected in Bosch Ltd’s injection equipment realizations jumping a steep ~30% for two successive years.
With BSIV & BSV implementation FIE realizations will move north
‐10%
‐5%
0%
5%
10%
15%
20%
25%
30%
35%
CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11
Fuel injection realisation growth
Source: Company, India Infoline Research While the emission cycle again turned in CY10, the realization jump was muted as the reference Euro III norms were only a small improvement Euro II norms. Largely the prevalent technology was modified to meet BS III compliance. Euro IV and Euro V norms are a big leap over the previous norms, and it would largely require a shift to the electronic injection. As the vehicle fold under BS IV compliant systems will increase, we expect the share of common rail systems to rise and realizations to move higher. A turnaround by mid‐CY14 will provide the fillip in Bosch's automotive OE segment CY15 revenues... Bosch Ltd's automotive division primarily supplies to CV, passenger cars and tractors segment. It supplies complete engine solutions and various other auto‐electricals to majority of OEMs of the country. Its automotive OEM sales have been closely linked to total industry 4W sales. We foresee the industry sales to remain sluggish till H1 CY14 on back of various factors, with widespread mining bans, high ground‐level interest rates and slowdown in investment capex being among the crucial ones. We build in modest growth (5%) in this segment factoring in muted outlook on 4W sales till H1 CY14. However we believe that by CY14 end, majority of these factors will start softening leading to a turnaround in automotive sales.
Currently the penetration levels of common rails in M&HCVs are at a meek 1% levels The technological change in CY04‐05 reflected in Bosch Ltd’s injection equipment realizations jumping a steep ~30% for two successive years
Euro IV and Euro V norms are a big leap over the previous norms, and it would largely require a shift to the electronic injection .
Bosch Ltd
6
Automotive OEM segment revenue has closely tracked total 4W sales
‐10%
0%
10%
20%
30%
40%
50%
‐5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11
Total 4W growth (LHS) Automotive OEM revenue growth
Source: Company, India Infoline Research
A recovery in 4W sales will provide a fillip in Bosch's primary business segment revenues. Additionally the segment will be primary beneficiary of the technological changes that we have spoken about. Meanwhile... Robust growth awaits in automotive aftermarket segment over CY13‐15E In India, engine components typically need to be replaced in 3‐4 years owing to various prevalent practices like using adulterated fuel and overloading the CVs. We plot four‐year‐lagged CV and car sales and find a strong co‐relation with the Bosch Ltd’s automotive aftermarket revenues. Taking note of the robust 4W sales which happened in CY10 and CY11, we expect the replacement cycle to kick in for these vehicles over CY13‐15E. Bosch being a leader in aftermarket will be well positioned to benefit from this opportunity. We build in healthy ~25% CAGR in automotive aftermarket revenues in our assumptions. 4‐year lagged automotive sales plotted with Bosch's automotive aftermarket revenues
‐20%
‐10%
0%
10%
20%
30%
40%
50%
0%
5%
10%
15%
20%
25%
30%
35%
CY07 CY08 CY09 CY10 CY11 CY12 CY13E CY14E CY15E
Aftermarket rev growth (LHS) 4 year lagged cars sales
4 year lagged cv sales
Source: Company, India Infoline Research
We plot four‐year‐lagged CV and car sales and find a strong co‐relation with the Bosch Ltd’s automotive aftermarket revenues Taking note of the robust 4W sales which happened in CY10, we expect the replacement cycle to kick in for these vehicles over CY13‐15E
Bosch Ltd
7
Auto‐electrical segment has been growing on back of starter motor division In its auto‐electrical segment, Bosch Ltd primarily supplies starter motors and generators. By leveraging its parental technology, Bosch Ltd introduced the new Baseline Generators (NBL) in 2010 in the Indian market. These were specifically aimed at lower power requirement vehicles like LCVs and hatchback passenger cars. Since introduction, the segment has grown at stupendous rates and driven the revenues of auto‐electric segment. We expect the segment to continue to do well over the years ahead.
Our revenue assumptions While a robust ~25% CAGR in replacement revenues will help Bosch Ltd over CY13‐15E; reversal in CV cycle and nationwide emission norm changes will provide the fillip then in diesel systems revenue from CY15 onwards. We see upside risks to our assumption in automotive OEM segment if common rail share increases faster than expected.
Since introduction of new baseline generators in CY10, the segment has grown at stupendous rates and driven the revenues of auto‐electric segment
Success of NBL generators has driven growth in auto‐electricals
Auto‐electricals share is on a swift rise
‐20%
‐10%
0%
10%
20%
30%
40%
50%
60%
70%
CY08 CY09 CY10 CY11 CY12
Auto‐electrical rev growth Starter motor & gen rev growth
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY10 CY11 CY12
Auto electricals Fuel Injection EquipmentInjectors, Nozzles Portable Electric Power ToolsOthers
Source: Company, India Infoline Research
Revenue contribution Our revenue projections
68%
22%
10%
Automotive OEM
Automotive Aftermarket
Non auto
Segment CY13E CY14E CY15EAutomotive OEM 2% 5% 8%Automotive Aftermarket 20% 30% 30% Non auto 15% 10% 10%
Source: Company, India Infoline Research
Bosch Ltd
8
Sharp dieselization has benefited Bosch Popularity of diesel cars has been picking up and is evident from the growth in car models wherein a diesel alternative is available. Such sharp dieselization has benefitted Bosch Ltd in our view. Estimated levels of dieselization in cars were ~55% in FY13, strongly helped by price advantage and the popularity of UV segment which is diesel based. While on back of diesel price hikes, the price advantage has reduced but still remains meaningful. Additionally a lot of new launches are lined up in the UV segment, which is expected to keep the demand of diesel cars strong. Almost all major OEM’s are amidst expansions in diesel capacity, and we expect the share to diesel cars to sustain the levels of ~50% in years ahead.
Source: Crisil, India Infoline Research; *includes passenger cars and UVs
Will continue to leverage the strong research strength Bosch Ltd has leveraged its strong parentage consistently and has imported many path‐breaking technologies in the Indian market which have resulted in superior profits and revenue growth for the company. A few examples are the distributor pumps in 2003, Common rail system in 2005, and new baseline generators in 2008. Robert Bosch Gmbh has consistently allocated large resources to R&D and spent a staggering 9.2% of its sales on R&D in 2012. The group as a whole filed for 4,500 patents worldwide, reflecting its preparation for the future.
Estimated levels of dieselization in cars were ~55% in FY13, strongly helped by price advantage and the popularity of UV segment which is diesel based Robert Bosch Gmbh has consistently allocated large resources to R&D and spent a staggering 9.2% of its sales on R&D in 2012
Diesel cars have outperformed their petrol counterparts
‐20%
‐10%
0%
10%
20%
30%
40%
FY10 FY11 FY12 FY13
Growth in pure petrol modelsGrowth in models with diesel alternative
Spend on R&D by the parent (Robert Bosch GMbh) and the number of patents filed
Prominent technology imported from parent in the last decade
7.4%
7.6%
7.8%
8.0%
8.2%
8.4%
8.6%
8.8%
9.0%
9.2%
9.4%
CY10 CY11 CY12
R&D spend (% of sales)
#3,800
#4,800
#4,150
# number of patents filed in year
Technology Year
Diesel Fuel Distributor Injection Pump 2003
Common rail diesel systems 2006
Baseline Generators 2008
Compact Direct Starter Motor, Common Rail ECUs 2011
Source: Company, India Infoline Research
Bosch Ltd
9
In middle of heavy capex to prepare for the next emission cycle change Bosch Ltd has been investing heavily in building capacities for newer technologies and reduce the import content. The year 2012 saw Rs7.3bn investment mainly in new packaging technology manufacturing plant at Verna, and increasing capacities in common rail technology and NBL generators. The company plans to invest ~Rs12bn spread over the next two years with focus on common rail technology and other diesel systems to reduce the import content going ahead.
Focus on localization will improve the margins over CY13‐15E Bosch Ltd has imported newer technologies, which have helped it cater the evolving changes in the Indian market. However, the rising import content has weighed on the margins we believe. Additionally, commodity pressures in local markets also have depressed the otherwise fairly resilient margins. Bosch Ltd has generally followed the policy of importing the technology and then gradually localizing it as its acceptance increases in the market. With heavy capex lined up in next two years around the diesel systems business, we believe the localization would help on the margin front. We expect the focus on localization to help margins
10%
12%
14%
16%
18%
20%
22%
24%
0%
5%
10%
15%
20%
25%
30%
35%
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13E
CY14E
CY15E
Import content (% of sales) OPM (RHS)
Source: Company, India Infoline Research
We note company is going to invest ~Rs12bn spread over next two years
With heavy capex lined up in next two years around the diesel systems business, we believe the localization would help on the margin front
Heavy capex lined up mainly in diesel systems Import content will trend down with localization capex around common rail and other diesel systems
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
CY10 CY11 CY12 CY13E CY14E
Rs mn
15%
17%
19%
21%
23%
25%
27%
29%
31%
33%
35%
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13E
CY14E
CY15E
Total imports as % of sales
Source: Company, India Infoline Research
Bosch Ltd
10
Capital efficiency ratios have remained superior... Build in some decline on heavy capex cycle Return ratios for the company have historically remained largely above the 20% mark in the last decade. However, incurring heavy capex has resulted in some depression in the return ratios of late. We expect the return ratios to slightly decline ahead and expect a gradual pick‐up as the capex cycle finishes. On back of heavy capex cycle… return ratios to slightly decline
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0
5
10
15
20
25
30
35
40
45
50
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13E
CY14E
Capex ROE ROCE% Rsmn
Source: Company, India Infoline Research How has Bosch benefited in previous emission norm transitions? Bosch has been supplying the most critical component in the engine which is relevant for lesser pollutants. During CY02, BSII norms were implemented in the top 13 cities with the nationwide implementation in CY05. It resulted in superior profits growth for the Bosch Ltd. With BS V (for top 13 cities) lined up for CY15, and a nationwide switch to BSIV in other cities, we expect sharp profits and top‐line growth ahead.
Profitability sharply improved in previous emission norm changes
‐22%
‐2%
18%
38%
58%
78%
98%
CY95
CY96
CY97
CY98
CY99
CY00
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
Net sales growth PAT growth
Major technology change
Change was less invasive
Source: Company, India Infoline Research
We expect the return ratios to slightly decline ahead and expect a gradual pick‐up as the capex cycle finishes CY02‐CY05 was the period in which the emission norms changed resulting in superior profit growth for Bosch Ltd
Bosch Ltd
11
A case for premium valuations Bosch Ltd’s strong parentage has enabled it to bring in path‐breaking technologies consistently and maintain its monopoly in the Indian diesel FIE business. Its strategy has been localization and it is already putting in huge capex to remain most competitive with the Indian OEM’s and stave off future competition. Monopoly position, high return ratios, focus on localization and a parentage having a very strong R&D pipeline make us confident of sustenance of Bosch Ltd.’s dominance in the Indian market. Additionally continual march towards stricter emission norms will structurally drive up earnings. Historically the company has traded with premium valuations with last 2‐year average P/E being ~25x. We assign a similar multiple to its CY14 earnings and recommend BUY with a 9‐month target price of Rs10,324. .
PE Band trailing
0
2000
4000
6000
8000
10000
12000
Jan‐06
Jul‐06
Jan‐07
Jul‐07
Jan‐08
Jul‐08
Jan‐09
Jul‐09
Jan‐10
Jul‐10
Jan‐11
Jul‐11
Jan‐12
Jul‐12
Jan‐13
Jul‐13
Jan‐14
CMP 13.2x 17.1x 21x 24.9x 28.8x
Rs
Source: Company, India Infoline Research
Key risks
Limited ability to pass on the foreign exchange fluctuation: The Company has a net exposure to dollar and a depreciating currency poses a risk as Bosch Ltd. has limited ability to pass the fluctuation to its customers.
Delayed recovery in CV cycle: If the depression in 4W sales continues beyond CY14, we see some downside risks to our estimates.
Monopoly position, high return ratios, focus on localization and a parentage having a very strong R&D pipeline make us confident of sustenance of Bosch Ltd’s dominance in the Indian market
Bosch Ltd
12
Company background Background Bosch Ltd. founded in 1951 in India, has grown to become the largest auto component manufacturer today and supplies to almost every OEM in the country. Its German parent Bosch GmbH holds 71.18% stake in the company. Presently company through its manufacturing facilities at Bangalore, Naganathapura, Nashik, Jaipur and Goa cater to three business segments: Automotive Technology, Industrial technology and Consumer Goods & Building Technology. The service network encompasses 1,000 cities with over 5,000 authorized representations to ensure widespread availability of both products and services. Product Range The products are classified in three segments: Automotive Technology, Industrial systems, Consumer Goods & building technology. The offerings in these segments are listed below: Automotive technology Fuel Injection equipment:
Common Rail systems
Axial distributor injection pumps (Electrical, Mechanical)
Multi cylinder inline/Single cylinder injection pumps
Injector and injection nozzles
Injection timers
High pressure fuel injection pipes Spark Plugs:
Spark plugs for 2/3/4 wheelers.
Long life plugs: Nickel Yttrium and twin electrode Starters and generators:
Starter motors/Generators
Start/stop systems Automotive electronics and multimedia:
Body electronics, Body control system
Electronics control unit
Vehicle security system, Automotive navigation, Central displays
Motors for steering drive Others:
Governors, Delivery valves, Glow equipments
Electronic control units Sensors for Temperature, Throttle position, engine speed, Camshaft position, knock, pressure.
Ignition coils, actuators
Lube oil filters, Petrol filters, Diesel filters, cabin filters
Inverter batteries, automotive batteries
Brake pads, clutch pads, brake fluids, gear pump
Relays, alternators, Test equipments like Engine analyser
Bosch Ltd
13
Industrial technology Industrial Equipment:
Special purpose metal cutting/grinding/honing/lapping machine
Assembly, Inspection, Cleaning machines
Gauges, Fixtures and test equipments
Exhaust Gas Re‐circulating Unit Packaging Equipments:
Form fill/Seal machines
Pharmaceutical and confectionary packing machines Consumer goods & technology Power tools:
Construction/Metal & wood working/Pneumatic tools
High pressure water jets/High frequency tools Security systems:
Video products/Access control/Fire alarm & intrusion detection
14
Bosch Ltd
Financials Income statement Y/e 31 Mar (Rs mn) CY12 CY13E CY14E CY15E
Revenue 84,172 92,926 104,989 117,248
Operating profit 13,495 15,601 17,843 21,134
Depreciation (3,670) (4,344) (4,871) (5,339)
Interest expense (55) (60) (60) (60)
Other income 3,692 4,550 5,300 5,566
Profit before tax 13,462 15,747 18,212 21,301
Taxes (3,879) (4,535) (5,245) (6,135)
Net profit 9,583 11,212 12,967 15,166
Balance sheet Y/e 31 Mar (Rs mn) CY12 CY13E CY14E CY15E
Equity capital 314 314 314 314
Reserves 55,419 64,258 74,670 86,916
Net worth 55,733 64,572 74,984 87,230
Debt 1,850 1,400 1,000 600
Total liabilities 57,583 65,972 75,984 87,830
Fixed assets 12,737 14,893 15,222 15,084
Intangible assets 67 67 67 67
Investments 15,198 18,198 21,198 24,198
Def tax asset (net) 2,552 2,552 2,552 2,552
Net working capital 12,157 13,027 14,225 15,443
Inventories 10,957 12,097 13,667 15,263
Sundry debtors 10,210 11,272 12,735 14,222
Other current assets 12,446 12,592 12,793 12,997
Sundry creditors (9,304) (10,272) (11,605) (12,960)
Other current liabilities (12,152) (12,662) (13,365) (14,079)
Cash 14,872 17,236 22,719 30,486
Total assets 57,583 65,972 75,984 87,830
Cash flow statement Y/e 31 Mar (Rs mn) CY12 CY13E CY14E CY15E
Profit before tax 13,462 15,747 18,212 21,301
Depreciation 3,670 4,344 4,871 5,339
Tax paid (3,879) (4,535) (5,245) (6,135)
Working capital ∆ 319 (870) (1,199) (1,218)
Operating cashflow 13,572 14,686 16,639 19,287
Capital expenditure (7,350) (6,500) (5,200) (5,200)
Free cash flow 6,222 8,186 11,439 14,087
Equity raised 1,056 ‐ ‐ ‐
Investments 1,149 (3,000) (3,000) (3,000)
Debt financing/disposal (604) (450) (400) (400)
Dividends paid (2,190) (2,373) (2,555) (2,920)
Other items (276) ‐ ‐ ‐
Net ∆ in cash 5,357 2,364 5,484 7,767
Key ratios Y/e 31 Mar CY12 CY13E CY14E CY15E
Growth matrix (%)
Revenue growth 6.2 10.4 13.0 11.7
Op profit growth (10.7) 15.6 14.4 18.4
EBIT growth (14.1) 16.9 15.6 16.9
Net profit growth (14.6) 17.0 15.7 17.0
Profitability ratios (%)
OPM 16.0 16.8 17.0 18.0
EBIT margin 16.1 17.0 17.4 18.2
Net profit margin 11.4 12.1 12.4 12.9
RoCE 25.2 25.6 25.7 26.1
RoNW 18.6 18.6 18.6 18.7
RoA 12.7 13.4 13.7 14.1
Per share ratios (Rs)
EPS 305 357 413 483
DPS 60 65 70 80
Cash EPS 422 495 568 653
BVPS 1,775 2,056 2,388 2,778
Valuation ratios (x)
P/E 29.1 24.9 21.5 18.4
P/CEPS 21.1 17.9 15.6 13.6
P/B 19.7 16.9 14.4 11.8
EV/EBIDTA 5.0 4.3 3.7 3.2
Payout (%)
Dividend payout 22.9 21.2 19.7 19.3
Tax payout 28.8 28.8 28.8 28.8
Liquidity ratios
Debtor days 44 44 44 44
Inventory days 48 48 48 48
Creditor days 40 40 40 40
Du‐Pont Analysis Y/e 31 Mar CY12 CY13E CY14E CY15E
Tax burden (x) 0.71 0.71 0.71 0.71
Interest burden (x) 1.00 1.00 1.00 1.00
EBIT margin (x) 0.16 0.17 0.17 0.18
Asset turnover (x) 1.12 1.11 1.11 1.09
Financial leverage (x) 1.46 1.40 1.36 1.33
RoE (%) 18.6 18.6 18.6 18.7
Recommendation parameters for fundamental reports:
Buy – Absolute return of over +10%
Market Performer – Absolute return between ‐10% to +10%
Sell – Absolute return below ‐10%
Published in 2013. © India Infoline Ltd 2013 This report is for the personal information of the authorised recipient and is not for public distribution and should not be reproduced or redistributed without prior permission. The information provided in the document is from publicly available data and other sources, which we believe, are reliable. Efforts are made to try and ensure accuracy of data however, India Infoline and/or any of its affiliates and/or employees shall not be liable for loss or damage that may arise from use of this document. India Infoline and/or any of its affiliates and/or employees may or may not hold positions in any of the securities mentioned in the document. The report also includes analysis and views expressed by our research team. The report is purely for information purposes and does not construe to be investment recommendation/advice or an offer or solicitation of an offer to buy/sell any securities. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in this document and must make investment decisions based on their own investment objectives, risk profile and financial position. The recipients of this material should take their own professional advice before acting on this information. India Infoline and/or its affiliate companies may deal in the securities mentioned herein as a broker or for any other transaction as a Market Maker, Investment Advisor, etc. to the issuer company or its connected persons. This report is published by IIFL ‘India Private Clients’ research desk. IIFL has other business units with independent research teams separated by 'Chinese walls' catering to different sets of customers having varying objectives, risk profiles, investment horizon, etc and therefore, may at times have, different and contrary views on stocks, sectors and markets. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to local law, regulation or which would subject IIFL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. IIFL, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel (W), Mumbai 400 013. For Research related queries, write to: Amar Ambani, Head of Research at [email protected] or [email protected] For Sales and Account related information, write to customer care: [email protected] or call on 91‐22 4007 1000
