In addition to the slowdown in the sector, there are specific challenges for Bosch.
The transition from Bharat Stage (BS) IV to BSVI emission standards would mean a transition away from diesel to petrol vehicles. Further the cost increase in the case of diesel vehicles will be much more than in petrol vehicles. The expected lower offtake of diesel vehicles, where it has a significant presence, will hurt the company’s powertrain division. While its market share in the petrol powertrain segment is rising and is around a third, it forms less than a fifth of revenue, given that the company has been a late entrant in the category.
Given the challenges due to BSVI transition as well as electrification, the company indicated it has been restructuring its operations, which include rightsizing employees, reskilling, and redeployment. The company had to take a hit of Rs 82 crore in the June quarter to account for these restructuring costs.
While the stock shed over 5 per cent in trade due to weak June quarter results and a muted outlook, it is down by a third over the past one year. Given the falling volumes for automakers and further pressure on revenues, analysts don’t expect an upside in the near term.