1

SYNOPSIS

Bosch is a leading supplier of

technology & services in the areas of

automotive and industrial technology,

consumer goods and building

technology in India.

During the quarter, the robust

growth of Net Profit is increased by

33.54% to Rs. 2811.40 million.

Bosch Group has announced an

investment of Rs 2,200 crores in

India for expansion plans at the

Bosch Nashik, Jaipur & Ahmedabad

facilities.

Bosch Ltd has recommended a

Dividend of Rs. 50 per share.

Bosch is the second largest patent

applicant in Germany, and the third

largest at the European Patent Office.

Net Sales and PAT of the company

are expected to grow at a CAGR of

15% and 21% over 2010 to 2013E

respectively.

Years Net sales EBITDA Net Profit EPS P/E

CY 11 81620.60 16475.80 11225.60 357.50 22.76

CY 12E 94271.79 19117.42 13310.63 423.91 19.19

CY 13E 104641.69 21414.73 15077.83 480.19 16.94

Stock Data:

Sector: Auto Component

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 9000/6268.00

Volume (2 wk. Avg.) 1001.00

BSE Code 500530

Market Cap (Rs in mn) 255454.70

Share Holding Pattern

1 Year Comparative Graph

BSE SENSEX Bosch Ltd.

C.M.P: Rs. 8135.50 Target Price: Rs. 9356.00 Date: April 02nd 2012 BUY

Bosch Ltd Result Update: Q4 CY11

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Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Bosch Ltd. 8135.50 255454.70 357.50 22.76 5.40 400.00

Amara Raja Batteries 292.00 2493.86 23.17 12.60 3.86 230.00

Lumax Industries Ltd 361.50 337.92 11.42 31.65 2.30 60.00

L.G. Balakrishnan 304.00 238.58 67.61 4.50 1.22 100.00

Investment Highlights

Q4 CY11 Results Update

Bosch Ltd. has reported net profit of Rs 2811.40 million for the quarter ended on

December 31, 2011 as against Rs. 2105.30 million in the same quarter last year,

an increase of 33.54%. It has reported net sales of Rs 20404.50 million for the

quarter ended on December 31, 2011 as against Rs 18836.10 million in the same

quarter last year, a rise of 8.33%. Total income grew by 10.23% to Rs 20948.30

million from Rs. 19003.50 million in the same quarter last year. During the

quarter, it reported earnings of Rs 89.54 a share.

Quarterly Results - Standalone (Rs in mn)

As At Dec-11 Dec-10 %change

Net sales 20404.50 18836.10 8.33%

PAT 2811.40 2105.30 33.54%

Basic EPS 89.54 67.05 33.54%

3

Break up of Expenditure

Segment Revenue

Particulars Q4 CY11 (Rs. in Mn)

Automotive Products 17738.40

Others 2062.00

Total 19800.40

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� Recommends Dividend

Bosch Ltd has recommended a Dividend of Rs. 50 per share for the year ended

December 31, 2011.

� Bosch India to invest Rs. 2,200 crores in 2012-2013

Bosch Group in India has announced an investment of Rs 2,200 crores for India.

Bosch is currently building a new electrical drives plant in Chennai, which will

begin operations in 2012. Expansion plans are underway at the Bosch Nashik,

Jaipur and Ahmedabad facilities as well. At Nashik, increased demand has

resulted in Classical Nozzle Holder production volumes going up from 17,000 units

a day to 26,500 units’ day. Bosch is also constructing a new plant in Ahmedabad.

With a floor area of 37,000 sqm the plant is expected to be functional by the first

quarter of 2012. This facility will produce hydraulic valves, power units and control

blocks as well as cylinders.

Company Profile

Bosch is a leading supplier of technology and services in the areas of automotive and

industrial technology, consumer goods and building technology. Additionally, Bosch

also has in India, the largest development centre, outside Germany, for end to end

engineering and technology solutions. Bosch set up its manufacturing operations in

1953, and has grown over the years to 14 manufacturing sites and 3 development

centers. The company is headquartered in Bangalore with manufacturing facilities at

Bangalore, Naganathapura (near Bangalore), Nashik, Jaipur and Goa.

The Bosch Group comprises Robert Bosch GmbH and its more than 350 subsidiaries

and regional companies in some 60 countries. If its sales and service partners are

included, then Bosch is represented in roughly 150 countries. This worldwide

development, manufacturing, and sales network are the foundation for further growth.

In 2011, Bosch spent more than 4 billion Euros for research and development and

applied for over 4,100 patents worldwide.

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Business Sectors

� Automotive technology

Bosch innovations have shaped cars from the start and will keep doing so in

future. As the world’s biggest independent automotive supplier, Bosch focuses on

innovations to make driving safer, cleaner and economical. Automotive Technology

is the largest business segment of Bosch in India, supplying to the local automotive

industry, and exporting components overseas.

Business divisions: Diesel Systems, Gasoline Systems, Chassis Brakes, Automotive

Accessories, Car multimedia, Starters and Generators, Energy and Body Systems,

Electrical Drives, Spark Plugs and Glow Plugs.

� Industrial technology

Bosch Rexroth AG is an expert for all drive, control and motion technologies. The

Bosch Packaging Machines division in India brings the global expertise to address

the needs of the local confectionary and pharmaceutical industries. The Special

Purpose Machines (SPMs) & High Precision Tooling division engineers customized

equipment using cutting-edge technologies for industries.

Business divisions: Automation technology, Packaging Machines, Special Purpose

Machines.

� Consumer goods and building technology

The Bosch Power Tools division in India is the market leader in the segment, offers

a complete range of power tools for construction, woodworking and metalworking

industry; cordless tools, accessories and tools for DIY (Do-It-Yourself) enthusiasts

as well. The Security Systems division in India is one of the leading security

technology players with a comprehensive portfolio. The Bosch Home Appliances

division made its India debut in 2011, and manufactures a range of world-class

refrigerators, washing machines, dryers and dishwashers.

Business divisions: Power Tools, Security Systems, Home Appliances.

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� Engineering and IT Services

The Engineering and Information Technology division of Bosch in India is the

largest development center of Bosch outside Germany. For over 15 years, it has

been the preferred engineering services and solutions partner for the Bosch Group

worldwide.

Group Companies

Bosch has been present in India for more than 80 years - first through a

representative office in Calcutta since 1922, and from 1951 through its subsidiary

Bosch Limited (then Motor Industries Company Limited).

In India, the Bosch Group operates through the following companies:-

� Bosch Ltd.

� Bosch Chassis Systems India Ltd.

� Bosch Rexroth India Ltd.

� Robert Bosch Engineering and Business Solutions Ltd.

� Bosch Automotive Electronics India Private Ltd.

� Bosch Electrical Drives India Private Ltd.

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Financial Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) CY10 CY11 CY12E CY13E

Description 12m 12m 12m 12m

Net Sales 68994.00 81620.60 94271.79 104641.69

Other Income 716.00 1329.10 1488.59 1637.45

Total Income 69710.00 82949.70 95760.39 106279.14

Expenditure -56286.70 -66473.90 -76642.97 -84864.41

Operating Profit 13423.30 16475.80 19117.42 21414.73

Interest 1144.30 1842.50 2026.75 2249.69

Gross profit 14567.60 18318.30 21144.17 23664.42

Depreciation -2539.70 -2578.40 -2784.67 -2896.06

Profit Before Tax 12027.90 15739.90 18359.50 20768.36

Tax -3438.90 -4514.30 -5048.86 -5690.53

Profit After Tax 8589.00 11225.60 13310.63 15077.83

Equity capital 314.00 314.00 314.00 314.00

Reserves 40666.40 46970.40 60281.03 75358.87

Face value 10.00 10.00 10.00 10.00

EPS 273.54 357.50 423.91 480.19

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12E

Description 3m 3m 3m 3m

Net Sales 20592.80 19913.10 20404.50 22444.95

Other Income 277.80 394.30 543.80 570.99

Total Income 20870.60 20307.40 20948.30 23015.94

Expenditure -16805.60 -16064.00 -16834.10 -18180.41

Operating Profit 4065.00 4243.40 4114.20 4835.53

Interest 447.90 454.80 479.50 537.04

Gross profit 4512.90 4698.20 4593.70 5372.57

Depreciation -499.20 -640.30 -966.00 -917.70

Profit Before Tax 4013.70 4057.90 3627.70 4454.87

Tax -1224.40 -1176.90 -816.30 -1269.64

Profit After Tax 2789.30 2881.00 2811.40 3185.23

Equity capital 314.00 314.00 314.00 314.00

Face value 10.00 10.00 10.00 10.00

EPS 88.83 91.75 89.54 101.44

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Key Ratios

Particulars CY10 CY11 CY12E CY13E

No. of Shares (in mn.) 31.40 31.40 31.40 31.40

EBITDA Margin (%) 19.46% 20.19% 20.28% 20.46%

PBT Margin (%) 17.43% 19.28% 19.48% 19.85%

PAT Margin (%) 12.45% 13.75% 14.12% 14.41%

P/E Ratio (x) 29.74 22.76 19.19 16.94

ROE (%) 20.96% 23.74% 21.97% 19.93%

ROCE (%) 36.43% 38.07% 34.49% 30.88%

Debt Equity Ratio 0.07 0.06 0.05 0.04

EV/EBITDA (x) 19.03 15.50 13.36 11.93

Book Value (Rs.) 1305.11 1505.87 1929.78 2409.96

P/BV 6.23 5.40 4.22 3.38

Charts:

Net Sales & PAT

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P/E Ratio (x)

Debt Equity Ratio

11

EV/EBITDA (x)

P/BV

12

Outlook and Conclusion

At the current market price of Rs. 8135.50, the stock is trading at 19.19 x

CY12E and 16.94 x CY13E respectively.

Earning per share (EPS) of the company for the earnings for CY12E and CY13E

is seen at Rs.423.91 and Rs.480.19 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 15% and

21% over 2010 to 2013E respectively.

On the basis of EV/EBITDA, the stock trades at 13.36 x for CY12E and 11.93 x

for CY13E.

Price to Book Value of the stock is expected to be at 4.22 x and 3.38 x

respectively for CY12E and CY13E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.9356.00 for Medium to Long term investment.

Industry Overview

Indian auto component industry is robustly driven by the growth in demand for

automobiles. The sector has become a lucrative business proposition for global

players, majorly owing to two factors. First, needless to say, the demand for

automobiles is increasing day by day in the country. India, a market with high

potential for the automobiles sector, is expected to witness a three-fold increase in

demand for automobiles by 2020. Secondly, all major global auto-makers are

establishing their bases here due to highly positive business environment, favourable

policies and government support.

According to a study by UK-based global financial advisory firm-Rothschild, India

would become the third largest auto industry by volumes after China and the US by

2015. This would give immense support to the growth of ancillary sector as well.

Major developments, investments and Government initiatives relating to the sector are

discussed hereafter.

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Indian Auto Components Industry Profile

According to a recent study by the Automotive Component Manufacturers' Association

of India (ACMA), original equipment manufacturers (OEMs) account for 41 per cent of

the auto components consumed in the Indian aftermarket.

The study estimated current size of Indian components business at Rs 24,800 crore

(US$ 4.87 billion), 49.7 per cent of which is formed by two-wheeler segment.

Passenger vehicles, commercial vehicles and three-wheelers follow with 24.7 per cent,

23.1 per cent and 2.5 per cent of the share respectively.

According to Arvind Kapur, President, ACMA, a large market in Indian spares business

is dominated by organised, semi-organised and a number of small, unorganised

players. He thus acknowledged the need for a process of accreditation to ensure better

customer service.

The study further projected that OEM-authorised network of service stations would

account for 20-30 per cent of the Indian auto components market by 2017 while that

of multi-brand organised service chains would grow to 5-10 per cent from 1-2 per

cent. Similarly semi-organised service centres’ and unorganised garages’ market share

would be 20-30 per cent and 45-55 per cent, respectively, in 2017.

India – The Global Auto Hub

Canada is looking for substantial investment opportunities in Indian auto components

market through the comprehensive economic partnership agreement (CEPA) which is

being discussed and negotiated by the two Governments. The agreement is likely to get

finalised by 2013. If fructified, the agreement would facilitate an annual increase of

economic output in two countries by almost US$ 6 billion and boost the two-way trade

by 50 per cent.

UK sees immense potential in the Indian auto ancillary sector, especially in the city of

Rajkot as it is known for auto components manufacturing. Peter Beckingham, British

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Deputy High Commissioner for Western India, also indicated possible ventures

between UK and Rajkot companies in near future.

According to industry sources, Rajkot's auto component industry, with over 500

manufacturers aggregating a net turnover of around Rs 1,500 crore (US$ 294.5

million), grows at an annual rate of 15-20 per cent.

Furthermore, 60 French automobile component suppliers are contemplating on

business opportunities to set up a vendor park near Sanand in Ahmedabad district.

The proposed vendor park would accommodate tier-1 and tier-2 auto-component

suppliers who would supply spares to the recent auto entrants in the State and even

to others.

Sanand is already home to a number of global auto-makers, like Ford and Peugeot.

Indian Auto Components Industry: Key Developments and Investments

Global private equity (PE) firm Actis PE has bought 10-13 per cent stake in Indian

auto component manufacturer Endurance Technologies for about US$ 71 million.

Endurance Technologies is a part of the automotive component major Endurance

Group and caters to companies like Bajaj, Yamaha, Suzuki, Honda Motorcycles and

Scooters and Royal Enfield. Global car makers such as Daimler, Audi, Fiat and

Porsche are the company's customers in passenger car segment.

German auto component maker Schaeffler Group is on an expansion spree in India.

The company plans to invest over Rs 1,000 crore (US$ 196 million) during 2012-15 in

the country to set up a manufacturing facility and to expand its existing plants. To

support its growth, the company would also double the number of its engineers and

recruit 1, 200 employees in the country.

Federal-Mogul's new facility in Chennai will commence its operations by March 2012.

The plant, being set up for producing braking and friction materials, will initially focus

on after market products like linings and brake pads. Federal Mogul is a global

automotive components manufacturer.

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Government Initiatives

The Government of India is in the process of forming a National Automotive Board

(NAB) which would become a formal set-up to look into the issue of recall of vehicles

and hence improve manufacturing standards. The prospective body, to oversee

technical and safety aspects of vehicles, will have representatives from all the nodal

ministries and automotive bodies such as the Automotive Research Association of

India (ARAI).

The Government of Gujarat has always been on a high to promote its industrial space

especially it's the automobile sector. In order to boost the State Government's efforts

in this regard, Gujarat Government's Industrial Extension Bureau, along with

Automotive Components Manufacturers Association, French Vehicles Equipment

Industries (FIEV) and French auto-major Peugeot, organised a seminar and business

meeting on January 9, 2011 wherein 60 French automobile component makers were

briefed on opportunities to set up vendor park near Sanand (Gujarat's auto hub) in

Ahmedabad district.

Similarly, the Government of Gujarat has also announced its plan to disburse 240

acres of land at Sanand to the All India Plastic Manufacturers Association (AIPMA) to

set up a plastic park that could attract an investment of about Rs 5000 crore (US$

981.65 million). The Government's move marks its eye for detail as the measure has

come in the light of the fact that a finished car would require about 150 kgs of plastic.

Road Ahead

Ratings agency Fitch has maintained a stable outlook towards the Indian auto

components industry for the year 2012. The industry is expected to perform well owing

to OEM’s robust demand for localised spares.

According to a report by ACMA, the Indian auto component industry would garner

US$ 113 billion of turnover by 2020-21, growing at a compounded annual growth rate

(CAGR) of 11 per cent through 2011-21. Not only domestic demand, India is poised to

scale new heights in terms of exports as well as the report estimates exports to be

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worth US$ 29 billion by 2020-21, growing at a CAGR of 18.8 per cent through the

forecast period.

______________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

17

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