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ICICI Securities Report
Bosch Ltd.’s Q1 FY22 operating performance was ahead of consensus estimates as adjusted Ebitda margin fell just 176 basis points QoQ to 12.5%.
However, we believe the gross margin expansion of 250 bps QoQ to 41.1% was aided by inventorisation (unsustainable) benefit to unit costs.
Automotive revenue declined ~22% QoQ on the back of mobility division (down ~24% QoQ) while non-automotive revenue fell ~38%.
We expect growth tailwind of tractor segment to slow down in FY23 while lack of diesel growth in passenger vehicles, market share loss in medium and heavy commercial vehicle is likely to keep Bosch's growth in check.
Delayed localisation leading to higher share of imports is likely to hinder Ebitda margins expansion vis-a-vis previous cycle levels (17-19%).
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