Bosch soars 12% in a subdued market on heavy volumes; hits over 2-year high

Analysts at Motilal Oswal Financial Services expect growth in Bosch to rebound faster on account of the revival of the commercial vehicle (CV) cycle and addition of the 2W segment

Shares of Bosch rallied 12 per cent, hitting an over two-year high of Rs 17,333, on the BSE in the intra-day on Wednesday in an otherwise subdued market on expectation of demand improvement going-forward.

At 01:15 pm, the stock was up 11 per cent at Rs 17,140, as compared to a 0.25-per cent decline in the S&P BSE Sensex at 59,565 points. Trading volumes on the counter jumped over 7-fold with a combined around 450,000 shares having changed hands on the NSE and BSE. In the past two weeks, an average sub 100,000 shares were traded on the counter.

The stock of the auto ancillary company was trading at its highest level since June 2019 and surpassed its previous high of Rs 16,900, touched on February 8, 2021. Bosch is a leading supplier of technology and services in the areas of mobility solutions industrial technology consumer goods and energy and building technology.

The outlook across the industry continues to remain positive primarily driven by the postponement of replacement demand by consumers over last 2 years. Hence, the demand will come back sharply with increase in mobility, believe analysts.

"The demand for passenger vehicles was stronger than expected due to shift in preference towards personal mobility due to pandemic. This was reflected in strong demand with first-time buyer share increasing to 50 per cent of domestic volumes in FY2020-21 (FY21) from 45 per cent in previous financial year. Strong rural recovery, increasing fleet utilization and government’s measures to revive the economy through infrastructure spending will likely drive volumes going forward," Markus Bamberger, Chairman, Bosch said in Annual General Meeting speech.

For April-June 2021 quarter (Q1FY22), Bosch had reported 146 per cent year on year (YoY) jump in total operational revenue at Rs 2,444 crore. The increase is due to lower base and recovery in sales as the lockdown restrictions eased across states in the country in June'21. However, the management had said it remains cautious on the business outlook amid the risk from a potential third Covid wave and unpredictability in the international supply chain.

Analysts at Motilal Oswal Financial Services expect growth in Bosch to rebound faster on account of the revival of the commercial vehicle (CV) cycle, the addition of the 2W segment, and content increase.

Bosch sees big opportunity in the 2W electric vehicle (EV) market as EVs are expected to increase to 10 per cent during 2025-30. It is also working on low-voltage products for 2Ws and LCVs. Bosch would localize EV components at the right time - as early localization may result in higher costs, the brokerage firm said.