Fundamental Analysis of Bosch: The German-based company Bosch with its slogan “Invented for Life” has launched its products and services in a wide range starting from home appliances to automobile ancillary products and Industrial technology services. After a century of running its business in India, Bosch now stands as one of the major MNCs in the world.
In this article on the fundamental analysis of Bosch, let us know in detail about the company, its products and services, financials, and more. So, keep reading till the end!
Fundamental Analysis of Bosch
Firstly, let us begin with an understanding of the company and its products and services. Later we shall know about the market size and business opportunities for the company. Moving on we shall analyze the financials of the company, go through the future plans of the company, and finally let’s conclude with a brief summary. So, let’s get started!
Bosch, a German-based multinational conglomerate is a global supplier of technology and services. The company was founded in 1886 by Robert Bosch as an automobile ancillary manufacturer and supplier. But now it has branched out into different business segments like Mobility, Industrial Technology, Consumer Goods, and Energy and Building Technology.
The company has a significant geographical presence in over 60 countries with around 468 subsidiaries. Further, the company has sales and service partners in roughly 150-plus countries worldwide.
The German-based company entered India in 1922 by setting up a sales office in Calcutta. Later in 1951, Bosch became the major stakeholder in MICO (Motor Industries Company Limited) by acquiring a major stake of 49%. Eventually, by 2008 Bosch had acquired a 57.5% stake in MICO and renamed it Bosch India Limited.
The company offers a widely diversified range of products and services starting from home appliances like ovens and refrigerators to automobile parts, power tools, security, and micromechanical systems.
Products and services of Bosch
The multinational conglomerate operates under 4 major business segments across the world that are Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. Coming to Indian operations, the company is engaged in 3 business segments including mobility Services, Home appliances, and Industry and Trade related products and services like Energy and Building technology.
Source: Investor Presentation of Bosch Ltd (India)
This is an image showing the sector-wise sales revenue of Bosch India Ltd up to March 2023 on a QoQ (Quarter on Quarter) basis. In the above graph, it can be observed that the company’s sales are positively increasing on QoQ basis in all three segments.
The worldwide sales increased by 9.4% in 2022 wherein the sales increased from 78.7 billion euros in 2021 to 88.2 billion euros in 2022. Overall, it is evident that the company is performing well at both the Global level and Indian level.
Firstly if we talk about the Mobility services industry, which implements the concept of shifting transportation solutions to on-demand services is one of the booming sectors in India, as speed transportation is a need of an hour everywhere. In India, the revenue from the mobility services sector is estimated to reach US$ 88.69 billion at the end of FY 2023.
As per the estimation by experts, the growth rate in this sector is expected at a CAGR of 3.51% resulting in a market volume of US $ 101.80 billion by 2027, which is a huge growth opportunity in the upcoming years.
Going forward, if we see the market of Home appliances in India, it is a highly competitive market with a volume of US $ 47.95 billion in 2023. The growth in this sector is expected at a CAGR of 5.65% annually. Since home appliances like washing machines and ovens are the essentials in the current busy lifestyle there may be fewer chances of loss in this segment.
Lastly talking about the Products and services, Bosch offers to Industry and Trades are based on the latest technologies like drive and control technologies which include automated products like mobile robotics for the automobile sector that has high growth potential in the future.
It also offers security solutions like automatic fire detection, video surveillance, and many more which are a need of an hour in the modern era. Since these are the latest technology-based products there is a high demand for these products and services.
Financial Analysis of Bosch
Well, until now we got to know about the company and its Industry, Now it’s time to focus on the core objective of this article, which is fundamental analysis of bosch. To conduct the research in a structured way, let’s dig deeper into the financials of the Bosch company in India.
Revenue and Net Profit Growth
Here, although there is an increase in the operating revenue during the past 5 years, we can clearly see that there is a decrease in the net profit. This is due to the overall increase in total expenditure during these years. If expenses are increased, then they lead to a reduction in profits.
|Fiscal Year||Operating Revenue/ Sales (in Rs Crs)||Net profit (in Rs Crs)|
The return ratios ROCE and ROE tell us the ability of a company to generate profits from the capital employed and the ability to give returns on shares of investors.
|Fiscal Year||ROCE (in %)||ROE (in %)|
Here we can observe that the return ratios kept on surging for the first 2 years. But in FY 2020 and 2021 we can see a drastic pitfall in the ratios which is mainly due to the overall downfall in the market due to Covid-19. But we can see that both the ratios, ROCE and ROE have increased more than twice post covid-19. This serves as a good sign of the growth potential of the stock.
Debt and Interest Coverage Ratios
|Fiscal Year||D/E Ratio||Interest Coverage ratio|
From the above table, we can clearly say that it is a debt-free company. This signifies that the company is fundamentally strong enough in the long term.
Future Plans Of Bosch India
Till now we have looked at the financials and products and services of the company now let us know what are the company’s plans for the future and its benefits to the investors.
The company entered India in 1922 at its first office and Calcutta and now it is celebrating a milestone of 100 years in India. It has many plans in the future to expand its operations wide and forth.
The company has plans to expand its multi-brand car service centers to over 1,000 locations by 2025 and a network strength of approximately 4000 outlets by 2027.
Bosch has also inaugurated the latest multi-brand Bosch Car Service in Krishnangar, West Bengal
Bosch has aimed to make an investment of INR 2,000 crore by 2025-26 for building advanced automotive technologies and digital mobility solutions.
Fundamental Analysis of Bosch – Key Metrics
Here let’s take a look at the key financial metrics of the stock
|CMP (In Rs)||18,725||Market Cap (in Rs Crs)||54,770|
|EPS (in Rs)||483.32||Stock P/E||38.42|
|ROCE (in %)||14.92||ROE (In %)||11.88|
|Face Value (in Rs)||10||Book Value||3730.54|
|Promoters Holding (in %)||70.54||Price to Book Value||4.9|
|Industry P/E||31.41||Dividend Yield||1.45|
|Net Profit Margin (%)||9.54||Operating Profit Margin (%)||12.68|
As we come to the conclusion of the fundamental analysis of Bosch, we can say that this large-cap company has huge growth potential in the future, as the company is also into technology-based products and services. Since it is a conglomerate, the ups and downs of one sector may complement the other during market volatility.
Additionally, since it is a debt-free company, an investor may consider this as a better long-term investment option. Let us know what is your take on investing in Bosch Ltd in the comments below!
Written By – Bhagyalakshmi Patil
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