Neutral Rating for Bosch as Target Price Set at Rs 35,323 by Motilal Oswal

Bosch Seals Acquisition of Sister Concern Bosch Chassis Systems India

Bosch has approved the acquisition of a 100% stake in its sister concern, Bosch Chassis Systems India (RBIC), a leading player in the automotive safety and braking systems market. The acquisition is expected to be a strategic move for Bosch, enabling the company to transition from selling individual mechanical components to providing an enhanced range of solutions to Original Equipment Manufacturers (OEMs), thereby strengthening its competitive advantage and creating long-term shareholder value.

RBIC has a strong financial track record, with a 17% revenue Compound Annual Growth Rate (CAGR) over FY23-25, accompanied by a 650 basis point margin expansion. The acquisition price of INR90.7 billion is based on 10.6x FY25 Enterprise Value to Earnings Before Interest, Depreciation, Tax, and Amortization (EV/EBIDTA). This valuation is attractive compared to the listed entity, which trades at 40.6x FY26E EV/EBITDA.

The acquisition is expected to lead to an EPS accretion of 5% on a FY25 basis. With the incorporation of RBIC financials into Bosch's estimates for FY27E, the company's earnings estimates have been upgraded by 5%/7% for FY27E/FY28E.

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Outlook and Recommendation

However, the recent rally in the stock, which has seen a 19% increase in the last three trading sessions, has made the stock appear fairly valued at 40x/35.7x FY27E/FY28E EPS. In light of this, we maintain a Neutral rating with a revised Target Price (TP) of INR 35,323, valued at 36x Dec'27E EPS.