Release Date: February 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bosch Ltd (BOM:500530, Financial) reported a 14.9% increase in overall revenue from operations for Q3 FY24 compared to the same period last year.
- The automotive aftermarket business grew by 8.6% quarter on quarter, driven by increased sales for spark plugs, filters, and lubricants.
- The beyond mobility solutions sector saw a significant growth of 32.5% in Q3 FY24 compared to Q3 FY23.
- The company declared a special interim dividend of INR205 per equity share for Q3 FY24.
- Bosch Ltd (BOM:500530) secured the Great Place to Work certification for the fourth consecutive time, highlighting its commitment to a high-trust, high-performance culture.
Negative Points
- Material costs as a percentage of total revenue increased to 62.3% in Q3 FY24 from 60% in Q3 FY23, impacting profitability.
- Tractor volumes declined by 13% year on year due to uneven rainfall and a high base from the previous year.
- The lower end of the passenger car segment continued to witness subdued demand.
- Sequentially, volumes dipped across segments due to increased production in Q2 FY24 for festive season demand, followed by seasonal softness.
- The company faced adverse Forex impacts on imported materials, contributing to higher material costs.
Q & A Highlights
Q: Component of traded goods has fallen meaningfully on a quarter-on-quarter basis on a stable top line. Can you explain this and its relation to the sequential drop in consumer business? Also, do you expect other expenditures to pick up in 4Q?
A: (Karin Gilges, CFO) The change in traded goods is due to ongoing localization efforts, which will take time to reflect significantly. (Guruprasad Mudlapur, MD & CTO) Localization will gradually reduce the traded part and increase the localized part over time.
Q: Can you provide a broad range of exposure to automotive segments like commercial vehicles and tractors?
A: (Guruprasad Mudlapur, MD & CTO) We do not split our business results in that category and will not provide that information at this time.
Q: How is Bosch participating in the electric two-wheeler and electric car markets?
A: (Guruprasad Mudlapur, MD & CTO) We have a good presence in the two-wheeler space with hub motors and localized production lines. For passenger cars, we are in early discussions with OEMs and will update as we progress. We aim for good margins and returns on investments.
Q: What level of other expenses have reduced due to the sale of project house mobility solutions?
A: (Karin Gilges, CFO) The reduction in other expenses due to the sale is roughly INR470 million. This includes lower spending on new businesses and customer projects.
Q: Any updates on the timelines for Trem V norms for tractors?
A: (Guruprasad Mudlapur, MD & CTO) The norms are expected to be implemented in 2026. We are fully prepared to meet these requirements.
Q: How does the delay in Trem V norms impact your capital allocation policies?
A: (Guruprasad Mudlapur, MD & CTO) We were aware of the delay early on and prepared accordingly, so it does not have a major impact on us.
Q: What is the outlook from customers for the M&HCV segment?
A: (Guruprasad Mudlapur, MD & CTO) The segment has bounced back and is expected to grow moderately. We anticipate a 3% to 5% growth in the coming year.
Q: Can you provide an update on the PLI scheme and its impact on Bosch?
A: (Guruprasad Mudlapur, MD & CTO) We have qualified for PLI and started investments. Disbursements have not started yet, but we expect to benefit from it in 2024.
Q: What are the timelines for the hydrogen truck project showcased at the Bharat Mobility Expo?
A: (Guruprasad Mudlapur, MD & CTO) We are working with OEMs on pilot projects. We expect to see some pilots on the road within the next year.
Q: How do you view the sustainability of other expenses reduction and what are the main drivers?
A: (Karin Gilges, CFO) The main drivers are customer projects, warranty expenses, and revaluation of payables. We are implementing cost measures and process optimizations to maintain a good fixed cost absorption.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
