Bosch Ltd, promoted by Robert Bosch GmbH, is India’s leading auto ancillary company. It is a dominant player in the diesel engine segment with ~70% market share. In FY15, Bosch derived 88% & 12% of its turnover from auto & non-auto segment respectively.
Valuation and View
Bosch is in a sweet spot given its leadership position, technology focus and unique positioning in the Indian auto industry. We expect revenue and PAT to grow at a CAGR of 4.5% and 11.6% over FY15-FY18E. Further, we rate the stock as ‘BUY’ assigning a forward P/E of 36.5x (given acceleration in growth trajectory due to advanced emission norms) arriving at a target price of Rs. 22,083 which implies potential upside of ~10% for next 12 months.
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