Bosch posts marginal drop in net profit, plans capex of Rs 15 bn in 3 yrs

Bosch: Buy-back could keep valuations elevated

  Auto component major Bosch Ltd on Tuesday posted a marginal decline in its net profit for the fourth quarter ended 31 March, 2018 due to a one-off expense but witnessed higher sales volume on the back of demand uptick in the domestic automobile sector.

The multinational engineering firm also said it would invest around Rs 15 billion in the next three years as part of its capital expenditure plan mostly for development of new products.    

In the March quarter, the firm’s standalone net profit dipped by 1.51 per cent to Rs 4.34 billion against Rs 4.40 billion reported in the same period of previous fiscal. The decline was attributed to setting aside of around Rs 1 billion towards gratuity payment of employees to meet the changed gratuity norms.

Revenue from operations increased by around 14 per cent to Rs 31.58 billion in the January-March period. "Our domestic sales have been growing steadily as India's automobile sector shows promising growth in the future," Soumitra Bhattacharya, Managing Director of Bosch Ltd, said.

For the financial year 2017-18, the consolidated net profit declined by around 21 per cent to Rs 13.71 billion as compared to Rs 17.41 billion reported in the previous fiscal. However, the company said the numbers were not comparable as previous year’s net profit included sale of its starter motors and generators business.

In FY18, revenue from operations stood at Rs 118.7 billion, a rise of 5.5 per cent over previous fiscal. According to the company, while mobility solutions business increased by 15 per cent, domestic sales increased by 14.8 per cent during the last financial year. Export sales also saw positive growth with 16.8 per cent rise.

On the outlook for this year, Bhattacharya said the company sees strong growth momentum this year on the back of rising automobile sales. To cash in the demand uptick, the company said it had invested Rs 4.7 billion in 2017-18 on building new products and would continue to do so in the next 2-3 years.

"Our capital expenditure will continue for next 2-3 years. This would be in the range of Rs 4.5 billion to Rs 6.5 billion per annum," Bhattacharya said.

The company, which had a profit margin of around 18 per cent in FY18, also said there is no margin pressure as it has a good product mix which will be able to absorb the higher material cost. Bosch Ltd with a cash reserve of around Rs 75 billion also sees higher business opportunities as the country gears up to achieve BS-VI emission norms from April 2020.