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Technical Outlook

• The auto ancillary space continued its primary up trend. Technically, we are constructive on Bosch, which we expect to outperform as it has generated a breakout above long term supply line joining highs since CY15 (| 27990) signalling turnaround after a long period of underperformance

• The stock, during CY22, has consolidated and formed a higher base above 13500 that is 50% retracement of the previous major up move (| 7850-19250)

• We expect the stock to head higher towards | 22000 in coming quarters as it is the 80% retracement of CY17-20 decline (25240-7850)

Fundamental Outlook

• Bosch Ltd (Bosch) is a technology leader providing solutions in automotive, industrial technology, consumer goods, energy & building technology. Mobility solutions (automotive products) comprised ~85% of FY22 sales with share of Business Beyond Mobility pegged at ~15%. Within mobility, it has a large presence in diesel-dependent vehicles (SUVs, CVs) & tractors

• We like Bosch given its leadership positioning in powertrain technology with parent supported ready solutions for Flex Fuel, BS VI phase II transition, EVs and hybrids. The company is poised to benefit from industry tailwinds in the form of healthy volume growth, diesel powertrain gaining traction domestically and incremental role to play amid more stringent emission control norms (BS-VI phase 2 and beyond)

• Amid strong focus on increasing domestic sales with underlying focus on exports (~9-12% of sales), we build in 18.2% sales CAGR over FY22-24E. Operating leverage gains and localisation push is seen aiding margin improvement to 14.5% by FY24E with consequent PAT growth pegged at 23.1% over FY22-24E. With cash positive b/s and capital efficient business model, we have a positive view on the company

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