MICO, 60.55% subsidiary of US $ 41.5 billion Robert Bosch, world’s largest auto part maker, has reported commendable performance for Q1 CY 2007. Net Sales grew @ 18.2% to Rs. 1070.11 crore (Rs. 905.16 crore) driven by consistent demand from automotive segment. However, OPM% declined slightly to 19.1% (20.2%), mainly because of spurt in raw material cost to 52.07% (50.62%) of sales. Nevertheless strong sales growth coupled with 12% higher other income of Rs. 27 crore (Rs. 24 crore) and 52% jump in interest income of Rs. 17.22 crore (Rs. 11.32 crore) resulted in PBT soaring up by 24.1% to Rs. 203 crore (Rs. 163.6 crore). Profit in sale of investments of Rs. 53.64 crore (Rs. 8.24 crore) lifted PAT up by 60% to Rs. 183.8 crore (Rs. 114.91 crore).
MICO has consistently been able to dominate domestic diesel fuel injection market, demand for which is expected to be robust in view of increasing focus of domestic auto manufacturers to meet stringent emission standards.
Company has already made a mark in domestic market by creating the brand CRDi (Common Rail Injection systems), supplying to majors like Maruti, Hyundai and M&M. Robert Bosch Group commands 75% market share in CRDi segment globally. Souring from Indian outfit would be major driving force for exports. In India as well, with expectancy of strong growth of four-wheeler markets and implementation of stringent emission norms, demand for CRDi is expected to get a big push going forward. With major part of Capex (~ Rs. 600 crore) towards CRDi capacity being completed, localization of components would lead to improvement in profitability margins. Towards this end, parent company plans to make massive investments (~ Rs. 1800 crore) in India. Fund infusion is based on Bosch’s aim to increase Asia Pacific market share to 25% (15%) of global market by FY 2015.
MICO is in talks with domestic 2-wheeler makers to develop electric injection system for motorcycles. Company will be focusing only on high end vehicles. As Indian market is moving towards higher powered vehicles, this segment will offer lots of opportunities to the company.
Besides, company is also focusing on non-automotive business. It has packing machinery, automation technology, power tools and security technology as part of non-automotive business. Spurred by strong GDP growth from huge investment in infrastructure development and boom in construction segment, power tool & security technology segments are expected to grow at faster pace. In packaging division, company is looking at setting up one stop shop for most packaging requirements. It has been catering to confectionary industry and now wish to tap pharmaceutical Market.
CY 2007 expected EPS of Rs. 185.84 and CY 2008 expected EPS of Rs. 235.84.
Source : Geojit Research Desk
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