Bosch, India’s largest auto ancillary company, has ventured into new technology businesses lines like CRS and is diversifying by entering newer verticals in the non-auto segment by leveraging its strengths in engine technology.
Bosch India is emerging as the preferred outsourcing base for Bosch Group. The group expects revenues from India to grow at a CAGR of 10% over 2006-2010 to Euro 1.5 billion of total revenues of Bosch Global by 2010.
The group has also announced Rs850 crore investment in India over 2008-2010 following Rs1,800 crore investment during 2005-08 taking total to Rs2,650 crore by 2010.
We expect Bosch’s Diesel System business to record 17.5% CAGR over CY2007-09E backed by 45% CAGR in CRS (70% CAGR over CY2005-07) and 9% (21% CAGR over CY2003-07) in the conventional diesel system.
One can enter the stock at lower levels with a long-term perspective. We maintain ACCUMULATE rating and DCF-based Target Price of Rs4,336.