>Bosch (ANGEL BROKING)

BOSCH

4QCY2008 Result Update
BUY; Target - 3600

Performance Highlights.....

* Better-than-expected Performance: For 4QCY2008, Bosch India reported 13.5% yoy growth in Net Sales to Rs974cr, which was marginally below our expectation of Rs994cr. This came on back of 17% yoy decline in Auto segment while Other businesses posted robust 33.1% growth. The company’s Bottom-line, which recorded 24.3% yoy decline to Rs94.2cr (Rs124.4cr) however, exceeded our expectation. Bottom-line was mainly supported by the 72.8% yoy increase in Interest Income to Rs35.3cr. While the Auto Segment clocked sluggish growth (in some segments), the company’s Non-Auto businesses continued to clock strong growth.

* EBITDA Margin declines 270bp: During 4QCY2008, Bosch witnessed a substantial 270bp yoy fall in EBITDA Margins owing to higher Raw Material costs, which moved up 202bp yoy and accounted for over 50.9% of Sales (48.9% in 4QCY2007). Bosch imports some of its key components from Europe. Hence, unfavourable exchange rate fluctuation impacted Margins. Further, the company’s product mix has also undergone changes consequent to which, its overall input mix has seen a gradual change, which was one of the reasons for higher Raw Material cost, as indicated by management. Other expenditure for the quarter however, declined by 231bp yoy, which cushioned the fall in Margins to an extent. Other expenditure declined mainly on the back of continuous efforts of the company to cut Operating costs on account of the industrial slowdown. Overall, Bosch reported a 27.2%yoy decline in Operating Profits (excluding Other Income) to Rs175.4cr (Rs240.9cr) primarily owing to low operating leverage during the quarter.

* Bottom-line down 24.3%: Bosch reported 24.3% decline in Net Profit to Rs94.2cr (Rs124.4cr) for 4QCY2008. The company reported 9.3% increase in Depreciation to Rs105.3cr (Rs96.4cr) in 4QCY2008 due to its ongoing capex in CY2008. Almost 70% of capex was booked in 2HCY2008. However, 113.1% yoy jump in Other Income negated the impact on Bottom-line to an extent. An increase of 72.8% yoy in Interest Income to Rs35.3cr also lent a boost to Bottom-line.

To see full report: Bosch