Tag: 2023

In India, Bosch is a leading supplier of technology & services in the areas of Mobility Solutions, Industrial Technology, Consumer Goods, and Energy & Building Technology. Additionally, Bosch has in India the largest development center outside Germany, for end-to-end engineering & technology solutions.

The Bosch Group operates in India through twelve companies: Bosch Limited – the flagship company of the Bosch Group in India – Bosch Chassis Systems India Private Limited, Bosch Rexroth (India) Private Limited, Robert Bosch Engineering & Business Solutions Private Limited, Bosch Automotive Electronics India Private Limited, Bosch Electrical Drives India Private Limited, BSH Home Appliances Private Limited, ETAS Automotive India Private Limited, Robert Bosch Automotive Steering Private Limited, Automobility Services & Solutions Private Limited, Newtech Filter India Private Limited and Mivin Engg.Technologies Private Limited. In India, Bosch set-up its manufacturing operation in 1951, which has grown over the years to include 16 manufacturing sites, & seven development and application centers.

Result Highlights

Bosch Ltd. had a strong financial performance in Q4FY23. Their net sales reached Rs. 4,697 crores, growing by 20.1% compared to the previous year. The recovery in the Indian automotive sector, driven by pent-up demand and the festive season, played a significant role in this success.

The mobility solutions business, which contributes 78% of the company’s revenue, grew by 24.2% YoY to Rs. 3,690 crores. This growth was fueled by the high demand for fuel injection systems, automotive sensors, and electrification solutions. The non-mobility business also experienced a healthy growth of 10.5% YoY to Rs. 1,007 crores, driven by strong demand for power tools, security systems, and packaging technology.

EBITDA for the quarter was Rs. 522.4 crores, a 29% increase compared to the previous quarter and 20% increase YoY. This growth can be attributed to strong sales and cost optimization measures implemented by the company. The EBITDA margin improved to 12.9%, thanks to a favorable product mix, lower material costs, and improved operating efficiencies.

The profit after tax (PAT) for Q4FY23 was Rs. 398.1 crores, reflecting a 13.4% YoY increase and 24.5% QoQ increase. However, the PAT margin decreased to 9.7% due to higher depreciation and other expenses

Valuation and Outlook

Bosch aims to achieve a 15% growth in revenue during FY24. This growth will be powered by key target categories experiencing high single-digit industry volume growth, increased value addition per unit due to OBD2 regulation, and improved semiconductor supply. The company has a strong order book, providing visibility for future growth.

During the quarter, Bosch continued investing in research and development (R&D) activities to improve its product offerings and meet the changing demands of the automotive industry. They also announced plans to establish a new manufacturing plant in Bidadi, Karnataka, to meet the rising demand for electrification solutions and technology-enabled products.

The company expects growth to be driven by an increase in content per vehicle, the opportunity in electric vehicles (EVs), and their healthy operating leverage. This means that as more advanced technology is incorporated into vehicles, Bosch will benefit from higher sales per vehicle. Additionally, the growing market for EVs presents an opportunity for further expansion.

Key Concall Highlights

1. Strong order book for the next 3-5 years due to acquisitions related to TREM5 and OBD2 regulations.
2. The automotive aftermarket segment saw 15% QoQ growth in Q4FY23, driven by market demand and strategic initiatives.
3. Increase in raw material prices, including electronic content costs.
4. Employee costs rose by 20.4% QoQ in Q4FY23 due to provisions on retirement-related costs.
5. Content per vehicle expected to grow with BSVI phase 2 norms and increased electronic components.
6. Semiconductor supply has improved but is not yet normalized.
7. Localization is a priority, transitioning from outsourcing to local production based on demand.

Click here to view the detailed report.

Established in 1970, SRF Limited is a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company’s diversified business portfolio includes Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, Coated and Laminated Fabrics.

Anchored by a strong workforce of 7,000+ employees from different nationalities working across eleven manufacturing plants in India and one each in Thailand, South Africa, and Hungary, the company exports to 90+ countries.

A winner of the prestigious Deming Prize for both Tyre Cord and Chemicals, SRF continues to redefine its work and corporate culture with TQM as its management.

Result Highlights

The company’s revenue increased by 6.4% compared to last year, reaching Rs. 3,778 crores. Despite challenges in the Technical Textiles and Packaging Films businesses, the overall performance was in line with expectations.

The chemicals business saw a significant growth of 33.7% YoY, driven by strong performance in the fluorochemicals and specialty chemicals segments. However, there was a decline of 1.7% YoY in EBITDA, with an EBITDA margin of 24.7%. Profit after tax was Rs. 563 crores, a decrease of 7.1% YoY, but an increase of 10.1% QoQ.

SRF also announced a capital expenditure to establish an aluminum foil manufacturing facility, with the projected cost now expected to rise from Rs. 425 crores to Rs. 530 crores due to changes for improved output.

Valuation and Outlook

Despite a global demand slowdown, SRF reported good financial results. The chemicals business showed strong revenue growth in Q4FY23, with the fluorochemicals and specialty chemicals segments performing exceptionally well. However, the packaging films business faced challenges and experienced margin pressure.

SRF’s core business, chemicals, is expected to continue growing profitably as it expands into larger industries. Compared to its peers, SRF is in a favorable position in terms of profitability and growth, primarily driven by the chemicals business. Over the long term, SRF is expected to generate stable revenues.

Currently, the stock is trading at a P/E ratio of 28.4x/23.1x based on FY24e/25e EPS estimates. Our valuation suggests a target price of Rs. 3,000, indicating a potential upside of 17%, driven by the strong growth prospects in the chemicals business.

Key Concall Highlights

1. Chemical Business Outlook: Looking ahead to FY24, the management expects the chemicals business to achieve a revenue growth of over 20%. They are focused on expanding into more complex products that bring greater value to the existing business. The company has a strong project pipeline in the chemicals segment, with Rs. 20 billion invested in progress, including the construction of 7 new plants for specialty chemicals and 3 plants for fluorochemicals.
2. Specialty Chemicals: The management of the specialty chemicals division observed a rise in demand from their customers for complex and advanced products. To meet this demand, the company has strong plans to begin manufacturing 7-8 active ingredients, which are currently in the contracting process.
3. Fluorochemical business: The management anticipates a continued positive trend in the fluorochemical business. They expect the demand for refrigerants to remain strong. Additionally, the management highlighted that starting from January 1, 2024, the US will reduce its production and consumption of refrigerant gas by 30%. This is advantageous for SRF because the US is a net importer, meaning it relies on importing refrigerant gas, which aligns with SRF’s business.
4. Packaging Films Business Outlook: The management acknowledged that there will be ongoing pressure on margins in the medium term. The progress of the aluminum foil project is on track, and it is expected to start operating in Q2FY24. This project will enable SRF to provide solutions in BOPET, BOPP, and aluminum foil. The management also anticipates volume gains by improving the capacity of the South African unit, which will enhance operational efficiencies. Furthermore, they have positive expectations for the performance of the Hungarian unit in the coming quarters.
5. Technical Textile Business Outlook: Regarding the technical textile business, the management noted that there are signs of improvement in the demand for Nylon Tyre Cord Fabric, indicating a revival. They also expect the demand for belting fabrics to remain strong, especially with a focus on infrastructure development. Additionally, the company anticipates a recovery in the demand for polyester industrial yarn, primarily driven by the geo-textile and seatbelts segments.

Headquartered in Gurgaon, India, Apollo Tyres Ltd has been in the business of manufacture and sale of tyres since its inception in 1972. Over the years, the company has grown manifold, extending its footprint across the globe.

The company has a manufacturing presence in Asia and Europe with 7 modern tyre facilities. It also exports to over 100 countries. Powered by its key brands — Apollo and Vredestein, the company offers a comprehensive product portfolio spread across passenger car, light truck, truck-bus, off highway and two-wheeler tyres, retreading material and retreaded tyres.

Result Highlights

Apollo Tyres Ltd. (ATL) delivered a strong operating performance in Q4FY23. This was mainly driven by sequential revenue growth in the APMEA division, lower tax provisions, and a favorable raw material cost environment.

Although overall revenue declined by 2.7% compared to the previous quarter, it increased by 12% compared to the same period last year, primarily due to a reduction in revenue from the European business. The company saw a significant improvement in consolidated EBITDA margin as compared to the previous quarter. The effective tax rate was lower as compared to 31.1% in Q3FY23.

As a result of the strong operating performance and lower tax provisions, the profit after tax increased by 40%, amounting to Rs. 409 crores. Despite the weak revenue performance for the third consecutive quarter, both the European business and APMEA business reported an expansion in EBITDA margin, reaching 18.1% and 15.9% respectively.

Valuation and Outlook

In the future, Apollo Tyres Ltd. (ATL) aims to maintain higher margins by focusing on improving its product mix with more premium sub-brands and larger-sized tyres. Over the next two years, the company plans to follow a strategy with limited capital expenditure and instead focus on maximizing capacity utilization by removing bottlenecks.

The company’s main goals are to achieve higher return ratios and increased margins. Although ATL has been gaining market share in Europe, the management expects a slow market in the near term but hopes for a recovery in the second half of FY24. ATL has been successful in passing on costs to customers while maintaining growth. Overall, we anticipate that ATL will benefit from its strategy of leveraging operations, reducing debt, and effectively managing costs in the future.

Key Concall Highlights

Indian Business:

1. In the Indian business, growth was driven by increased sales for original equipment manufacturers (OEMs) and an improved product mix.
2. Although no price hikes were implemented in Q4FY23, earlier price increases by ATL and lower raw material costs contributed to its operational performance.
3. The replacement demand has started to recover, and the management expects high single-digit to low double-digit growth in FY24.
4. ATL gained market share in the truck and bus radial (TBR) segment, but the passenger vehicle (PV) tire segment did not perform as well.

European Business

1. Despite a 13% decrease in the passenger car and light truck tyre (PCLT) market, ATL managed to increase its market share by 50 basis points (0.5%) compared to the previous year. In addition, it gained 90 basis points (0.9%) more market share in the off-highway tyre (OHT) segment.
2. ATL’s product mix in Europe remained strong, with the ultra-high-performance (UHP) and ultra-ultra-high-performance (UUHP) tyres accounting for 43% of its PCLT sales volume.
3. ATL’s main focus is on maintaining a high EBITDA (earnings before interest, taxes, depreciation, and amortization) margin, which is a measure of profitability

Capex:
In the upcoming financial year, the company has planned to invest Rs. 1,100 crores for capital expenditure (capex). However, it’s important to note that the majority of this amount will be used for maintenance, debottlenecking (improving operational efficiency), and research and development (R&D) activities, rather than for expansion purposes.
Out of the total capex, Rs. 680 crores will be allocated to the Indian business, while the remaining amount will be dedicated to the European business.

Click here to view the detailed report.

Read more about the other results declared in Q4

Bharat Forge Limited (BFL), the Pune-based Indian multinational is a technology-driven global leader in metal forming, having a transcontinental presence across ten manufacturing locations, serving several sectors including automotive, power, oil and gas, construction & mining, locomotive, marine and aerospace.

It is India’s largest manufacturer and exporter of automotive components and the leading chassis component manufacturer in the world. BFL’s customer base includes virtually every global automotive backed by several decades of experience in component manufacturing & metallurgy, the company has embarked on an ambitious and exciting journey to redefine its already existing presence across several critical business verticals such as oil & gas, power, locomotive & marine, defence & aerospace, metals & mining, construction and general engineering.

Result Highlights

In the last quarter of FY23, Bharat Forge Limited (BFL) earned revenue of Rs. 1,997 crores, with growth in both domestic and export sales. Their standalone EBITDA was Rs. 488 crores.

It reported a standalone profit after tax (PAT) of Rs. 244.6 crores. However, the negative EBITDA margin of their foreign subsidiaries affected overall profitability for the third consecutive quarter, despite some improvement.

BFL expects to turn EBITDA positive in major markets within the next two to three quarters as they increase their aluminium forging capacity in the EU and the US.

Additionally, BFL has secured orders worth Rs. 4,000 crores in FY23 across defence, castings, and standalone businesses, indicating promising revenue opportunities for the future.

Valuation and Outlook

Because of global supply chain problems, the growth of passenger vehicles has been slow, and demand for commercial vehicles is expected to stay steady in both local and international markets. However, Bharat Forge Limited expects growth in industries other than automobiles, such as aerospace, defence, and oil & gas.

The e-mobility sector has a promising future, but the competition is still changing. It is expected to improve in the next few months because they have clear orders, the aluminium business is growing in the US and the EU, and there is less inflationary pressure in India and other countries.

Key Concall Highlights

1. Industrial and energy segment revenue increased by 21% quarter on quarter due to higher volumes and improved product mix. The company aims to expand its presence in the renewable energy sector.
2. The management expects better performance in Q1FY24 compared to Q4FY23, with anticipated profitability in Europe and the US business in Q1FY24 and Q3FY24, respectively.
3. The aerospace business, which contributes around 11% of industrial revenue, is expected to grow by 30-40% and generate Rs. 500-600 crores in the coming years.
4. Defence orders include a flagship artillery gun order with revenue of USD 100 million expected in FY24, along with an export order book of Rs. 2,000 crores.
5. The acquisition of a new unit in Coimbatore and planned capex at the JSA plant will expand capacity from 40,000 to 120,000 tons, leading to revenue growth in the next two to three years.
6. Interest costs are estimated to be around Rs. 60-65 crore per quarter going forward.

Click here to view the detailed report.

Read more about the other results declared in Q4

Chalet Hotels
UPL Ltd.
CEAT Ltd.

United Phosphorous (UPL) was founded in 1969 and is a manufacturer of crop protection products, intermediates, speciality chemicals, and other industrial chemicals. UPL is India’s largest agrochemical producer. It is one of the world’s top five post-patent agrochemical firms. It has produced over 100 insecticides, fumigants, rodenticides, fungicides, PGR, and herbicides and offers a wide range of goods.

UPL is a global crop protection product company with customers in 123 countries. Argentina, Australia, Bangladesh, Brazil, China, Canada, Denmark, Indonesia, France, Hong Kong, Japan, Korea, Mauritius, Mexico, New Zealand, Russia, Spain, Taiwan, South Africa, USA, UK, Vietnam, and Zambia all have subsidiary offices.

Quarterly Result Highlights

UPL’s revenue for the quarter grew by 4.5% but it fell short of market expectations.

The quarter was challenging due to lower product prices and planting delays, affecting sales. That being said, the company achieved strong annual revenue growth in Latin America, Europe, India, and the Rest of the World, while there was a decline in revenue in North America.

Higher volumes and improved prices were seen in the company’s corn and sunflower portfolios, but lower volumes in the vegetable portfolio partially offset the gains. EBITDA decreased by 19.5% YoY with a lower EBITDA margin mainly due to weaker performance in the post-patent space.

Profit after tax decreased by 37.8% YoY and 20.6% QoQ, below market expectations.

Valuation and Outlook

Despite challenges in Q4FY23, the company achieved healthy revenue growth. The quarter faced pricing pressure and delayed purchases in the post-patent space due to oversupply.

In Q3FY23, the company focused on market share growth, inventory management, and working capital optimization. With lean inventory and readiness for FY24, the company is prepared for ongoing market challenges.

Once the market normalizes, UPL is expected to benefit. The demand for agrochemicals remains strong, and the company is well-positioned to handle market headwinds and achieve improved profitability.

Key Concall Highlights

UPL Global Crop Protection (excludes India):

1. Lower revenue growth in the quarter was due to delayed spring season in the USA, declining post-patent prices, and purchase delays caused by pricing volatility.

2. Management expects revenue growth of 4-8% and EBITDA growth of 6-10% for FY24.
3. The company aims to achieve over 50% of revenues from high-margin differentiated and sustainable solutions by FY27. They plan to accelerate growth in specific countries, crops, and segments.
4. The management anticipates $120 million in revenues from new product launches in FY24.

UPL Sustainable Agri Solutions (India)

1. Management expects revenue growth of 12-16% and EBITDA growth of 14-18% for FY24.
2. New product launches include Sperto, Fascinate Flash, and Larviron Spruce.
3. The Nurture Platform is anticipated to reduce EBITDA level loss by 50% in FY24 through value pricing of services and overhead optimization.

Advanta Enterprises

1. The company has increased its market share in Canola in Australia and South Africa by offering a renewed portfolio with multi-herbicide-tolerant trait platforms.
2. Market share growth in India and Indonesia is driving the expansion of Tropical Yellow Field Corn.

Manufacturing and Specialty Chemicals

1. Management expects revenue growth of 10-14% and EBITDA growth of 12-16%.
2. The company is increasing its external B2B collaborations.
3. UPL is anticipated to meet the growing demand from other UPL Group companies.

UPL Growth Outlook

For FY24, management expects revenue growth of 6-10% and EBITDA growth of 8-12%.