Bosch market cap crosses Rs 1 trillion; stock hits new high, gains 6%

Bosch has joined the elite group of companies with a market capitalisation of Rs 1 trillion, after the stock price of auto ancillary company hit a new high of Rs 34,331.80  as it rallied 6 per cent on the BSE in Tuesday’s intra-day trade.

At 11:13 am; with Rs 1.0 trillion market capitalisation, Bosch was trading 5 per cent higher at Rs 33,918. In comparison, the BSE Sensex was up 0.35 per cent at 77,260.

With today’s gain, the stock has recovered by 25 per cent from its low of Rs 27,500 touched on June 4. Thus far in the calendar year 2024, it has surged 55 per cent on healthy growth outlook, as compared to 7 per cent rise in the benchmark index.

Bosch has its presence across sectors such as mobility solutions, industrial technology, consumer goods, and building and energy technology. It manufactures and trades products as diverse as diesel and gasoline fuel injection systems, automotive aftermarket products, electric power tools, security systems, and industrial and consumer energy products and solutions.

The company concluded FY23-24 with a strong performance and considerable revenue growth of 12 per cent and profit after tax by 29.1 per cent, despite multiple headwinds that plagued the industry. The resilient uptick was fueled by increased demand for passenger cars and consumer goods product segment.

To address the evolving market trend of cloud-based diagnostics and AI supported services, Bosch, in a global realignment, has decided to transfer its Original Equipment (OE)/OE Spares diagnostic business from Mobility Aftermarket division to RB GmbH subsidiary – ETAS, in order to grow the business further and have synergies with existing line of ETAS businesses. This integration into the ETAS India organization will be effective starting July 1, 2024.

The management hinted at healthy growth in the business in FY25 after the general elections, led by improved macro drivers, however CV and tractor segment may see moderation in growth due to high base. The management is continuously focussing on rise in localization and looking for an improved level of profitability in coming years.

On the future outlook, Bosch said in FY 2024-25, the underlying economic conditions and increased sales in key segments are likely to keep the India growth narrative unchanged. The sustained investment in infrastructure in India will continue to drive growth in Bosch’s Power Tools and Building Technologies business divisions.

The company has indicated that it has a good share of orders in 2W electric vehicles (EVs). It is also in serious discussions with multiple OEMs for the supply of e-axles and electronics for EVs.

Analsts at Motilal Oswal Financial Services believe that Bosch would be outperforming the underlying auto industry growth with new order wins and content increases. The brokerage firm expects BOS to deliver a 24 per cent earnings CAGR over FY24-26E (on the back of 13 per cent revenue CAGR).

Given its technological expertise and support from its parent, brokerage firm Sharekhan said they continue to believe Bosch would be a key beneficiary of the implementation of stringent emission norms in the domestic automotive market as the increase in complexity offers it an opportunity to enhance its content per vehicle.

Gradually, Bosch has been emerging as the preferred complete power train solutions provider for OEMs. This enables a regular order inflow and visibility of business. The company’s strong brand positioning, focus on technology, and electrification of vehicles will enable its high-growth visibility and, hence, justify the high valuation.

Along with that, its readiness with hydrogen technology is expected to keep it ahead when the utilization of hydrogen technology will be well accepted in the market. Sharekhan has maintained its Buy rating on the stock with a revised price target of Rs 35,968 on expectations of rising localization, increased content per vehicle, and emerging opportunities in the alternative power train.