Bosch Ltd which is known as Robert Bosch GmbH and stylized as BOSCH, is a German multinational engineering and technology company which is headquartered in Gerlingen, Germany. The company was founded by Robert Bosch in Stuttgart in 1886. Bosch is 92% owned by Robert Bosch Stiftung, a charitable institution. The company’s core operating areas are spread across four business sectors: mobility (hardware and software), consumer goods (including household appliances and power tools), industrial technology (including drive and control) and energy and building technology.
Bosch Ltd has operational presence across automotive technology, industrial technology, consumer goods and energy and building technology. The company manufactures and trades in products such as diesel and gasoline fuel injection systems, automotive aftermarket products, industrial equipment, electrical power tools, security systems and industrial and consumer energy products and solutions.
Quarterly Growth
During the 2nd quarter of the current fiscal year, Bosch reported a year-on-year (YoY) growth of 25 percent in net sales, supported by a sturdy growth of 30 percent in the automotive segment. The growth in the automotive segment was assisted by a coherant semiconductor chip supply.
Despite a spike in raw material prices (up 210 basis points as a percentage of sales), Bosch faced a mere contraction of 48 basis points in its EBITDA (earnings before interest, tax, depreciation, and amortisation) margin. The wide product range has aided the company to suppress the impact of rise in the prices of raw materials.
Favourable Scope
The performance of Bosch is correlated to the growth in the CV segment. The medium- to long-term outlook is favourable, with a strong momentum with economic stability. The management has reported that the M&HCV segment is expected to maintain the strong performance post the pandemic, with demand being aided from core activities, which are construction, mining, and infrastructure.
Farming appears to be bright pivot based upon the back of normal monsoon and higher crop production, is expected to support demand. The company has also introduced products in the M&HCV segment that will help outperform the industry.
The growth in demand for the light commercial vehicle (LCV) segment remains rigid, supported by remote connectivity through e-commerce players.
The company finds in the bus segment very opportunistic, which had been restrained by COVID-related restrictions. With the reopening of schools, colleges, and offices, demand in this segment is most probably about to gain action in the upcoming months.
Another long-term opening for the company might be the implementation of the six-airbag rule in cars as Bosch is a leading manufacturer of the airbag control unit. The rule is expected to be implemented by October 2023.
Technical Analysis
Bosch stock is priced around Rs 17000 which makes it unaffordable. A stock split could help bring in the depleted liquidity and ease up the big spreads on the stock. Despite being the market leader in many areas, the stock is still below its lifetime high of Rs 27990 made back in March 2015. The stock faces stiff resistance at the 50% retracement level at Rs 17920. MFI stands at 72 points which makes the stock overbought for the current swing high. This stock has given very poor returns from the recovery of the COVID market crash.
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