Bosch 1QFY27 Beat Highlights Mobility Growth From New Regulatory Content

Investment View and Valuation

Motilal Oswal Financial Services Limited retained its Neutral rating on Bosch Limited after the company delivered a strong 1QFY27 performance that exceeded estimates across revenue, EBITDA and profit. The broker acknowledged the improved earnings outlook and growth opportunities arising from automotive regulation, but considers the valuation fair, with Bosch trading at 44.6 times FY27E EPS and 41.4 times FY28E EPS.

The target price is Rs 43,728, based on approximately 40 times FY28E EPS, compared with a CMP of Rs 45,185.

1QFY27 Financial Performance

Bosch reported 1QFY27 net revenue of Rs 58,419 million, up 22.0 per cent year on year and ahead of Motilal Oswal’s estimate of Rs 53,153 million. The outperformance was led by the automotive segment, particularly Power Solutions and two-wheeler Powersports.

Reported gross margin contracted by approximately 420 basis points year on year and 130 basis points sequentially to 33.5 per cent, below the broker’s 35 per cent estimate. However, EBITDA increased approximately 28 per cent year on year to Rs 8,180 million, as strong revenue growth and lower-than-expected employee and other expenses more than offset the gross-margin pressure. EBITDA margin expanded to 14.0 per cent from the year-earlier period, exceeding the 12.2 per cent forecast. PAT increased 1.3 per cent year on year to approximately Rs 7,000 million, ahead of the Rs 5,300 million estimate.

Segment Performance and Mobility Growth

Mobility business revenue rose 25.7 per cent year on year, with Power Solutions revenue increasing 29 per cent and the two-wheeler segment growing 41.4 per cent. Consumer Goods revenue grew 20.9 per cent.

• Automotive revenue was Rs 52,344 million, representing 89.6 per cent of total revenue.
• Non-automotive revenue was Rs 6,092 million.
• The automotive outperformance was led by Power Solutions and two-wheeler Powersports.

Management Outlook and Growth Drivers

Management expects the automotive industry to grow approximately 8 per cent in the next quarter, supported by festive demand, stronger rural cash flows and infrastructure spending. It considers the prevailing EBITDA margin sustainable, supported by localisation, sourcing efficiencies and Bosch’s global purchasing organisation.

Medium-term mobility growth is expected to be driven by volume growth, premiumisation, product-mix improvement and new technology launches. Export revenue currently represents approximately 8.0–8.5 per cent of revenue, and management aims to increase this contribution gradually over the next few years.

Regulatory Content and New Technology Opportunities

Regulatory changes represent a key opportunity for Bosch. CAFE Phase 3, scheduled to begin in April 2027, is expected to increase the company’s content opportunity. Commercial-vehicle ADAS norms will begin from January 2027 for new models and from October 2027 for all models. Bosch has also secured order wins following the implementation of OBD2 in two-wheelers from April 2025.

• Bosch is working with OEMs on electric-vehicle solutions.
• The company has launched a vehicle control unit for a leading passenger-vehicle OEM.
• Management sees potential for hydrogen-based solutions that could be local for global markets.

Business Developments and Partnerships

Bosch completed the acquisition of the Bosch Chassis Systems business in July 2026. The business is expected to be consolidated from 2QFY27.

Joint ventures for Chennai-based air systems with TSF Group and Nashik-based e-axles with Tata AutoComp are expected to start generating revenue by late FY27.

Earnings Estimates and Key Risks

Following the quarterly beat, Motilal Oswal raised its FY27E and FY28E PAT estimates by 10.7 per cent and 5.0 per cent, respectively. The broker forecasts FY26–28 revenue, EBITDA and PAT CAGRs of 26 per cent, 31 per cent and 17 per cent, respectively.

The key pressure on the investment case is the high traded-goods component in raw-material costs. New technologies are initially imported from the parent and localised only after scale develops, leaving margins exposed to the long gestation period of localisation projects.