Table of Contents
Sector Outlook: Neutral
Comprehensive growth in business segments drives profitability
Bosch Ltd reported healthy financials in Q2FY25, with revenue growth of 6.4% YoY to ₹43,943 million and EBITDA growth of 14.1% YoY to ₹5,605 million, leading to an EBITDA margin of 12.8% (up 86 bps YoY). Growth was driven by increased sales in passenger vehicles, off-highway segments, and Mobility Aftermarket (+8.8% YoY), supported by higher export demand (+10% YoY). PAT stood at ₹5,359 million, down 46.4% YoY due to one-time impacts from the sale of “Project House Mobility Solutions” and “OE/OES Diagnosis.” However, PAT margins improved sequentially to 12.2% (+141 bps QoQ), beating market estimates. The company showed strong performance across automotive and power solutions, supported by material cost improvements and robust export growth.
Key Concall Highlights
Outlook:
- Passenger Cars Inventory Concern: The passenger car segment faced high inventory levels of approximately 70 days in Q2FY25, raising concerns about inventory build-up in the car segment.
- Festive Season Outlook: The company anticipates steady growth in the passenger vehicle (PV) segment, with the festive season expected to ease inventory concerns.
- Cautious Stance: Despite the festive boost, the company maintains a cautious outlook for the PV segment.
- Sustained Demand: The company expects sustained demand across all segments, supported by festive period activity in the upcoming quarter.
Business Update:
- Two-Wheeler Business Growth: Grew by 13.4%, driven by increased sales of fuel injectors and exhaust sensors due to higher demand from leading domestic motorcycle manufacturers.
- Consumer Goods Business Growth: Achieved a 10.1% growth, fueled by strong demand for grinders, drills, cutters, spares, and accessories, reflecting market expansion.
- Building Technologies Business Growth: Expanded by 20.1%, supported by the execution of a large number of orders for video surveillance and communication systems installations.
- Mobility Aftermarket Division Challenges: Faced challenges in the independent aftermarket (IAM) due to lower demand in the diesel space category.
- Positive Performance in Key Product Lines: Witnessed double-digit growth in key segments, including diesel, rotating machines, batteries, and wipers, within the Indian market.
CNG:
- The company have supported the launch of the world’s first CNG bike with the Bosch Engine Management System. The Bosch Engine Management System, EMS, is a biofuel solution and can operate either in CNG fuel mode or gasoline fuel mode.
Other Updates:
- The current deadline for Trem5 for tractors is April 2026, and the management is hopeful it will not be postponed again. Bosch will start with a high level of localization.
- The company has a decent amount of CapEx, roughly INR4,000 million, which is lower compared to last year.
Valuation and Outlook
Bosch Ltd reported steady growth across all segments despite challenges in the automobile industry, though it missed street estimates for revenue and EBITDA. Margins remained stable due to favorable material pricing. The company is optimistic about pre-buying ahead of TREM V implementation and increased localization, which is expected to support margin expansion. Bosch has also positioned itself well in the two-wheeler CNG market and plans to enhance its professional sound segment with new products. While global sentiment remains weak, particularly in Europe, and the auto industry faces a slowdown, Bosch expects FY25 to follow a similar trajectory to FY24. Management remains cautious about rising input costs but anticipates growth driven by improved localization and advancing demand.
