Buy Bosch; target of Rs. 6766: Angel Broking

Bangalore: Angel Broking is bullish on Bosch and has recommended accumulate rating on the stock with a target of Rs. 6766.According to Angel Broking, Bosch reported strong set of numbers for 3QCY2010, which were better than our expectations. Growth was largely aided by a strong recovery in the CV cycle and pre-buying before the change in emission norms, which helped to increase product off-take in 3QCY2010. Margins improved on higher operating leverage. Thus, net profit for the quarter broadly came in higher than our estimates.

For 3QCY2010, Bosch reported a 31.9 percent (yoy) increase in net sales to Rs. 1711 crore, aided by 31.8 percent growth in the automotive segment and 36.1 percent growth in the others segment. The company reported net profit growth of 21.2 percent (yoy) to Rs. 236 crore (Rs. 195 crore in 3QCY2010), above our estimate of Rs. 205 crore, largely aided by healthy top-line performance and improved operating leverage.

According to Angel Broking, Bosch is expected to post EPS of Rs. 314.8 and Rs. 338.3 for CY2011E and CY2012E, respectively, owing to the anticipated good growth in auto demand. At the CMP of Rs. 6200, the stock is quoting at 19.7x CY2011E and 18.3x CY2012E EPS, respectively. We rollover to CY2012E and maintain an Accumulate view, with a target price of Rs. 6766.