Bosch — Q3 FY25 earnings call

Call held 28 Jan 2025

Management summary

Bosch Limited reported a mixed Q3 FY25 with revenue growth driven by mobility aftermarket and two-wheeler segments, leading to an improvement in EBITDA margin for the nine-month period. However, profit after tax saw a decline both quarter-on-quarter and year-to-date, impacted by a significant restructuring provision of 471 million INR in the Mobility business. The company continues to navigate macroeconomic uncertainties and segment-specific demand fluctuations while focusing on advanced engineering solutions and strategic realignments.

Highlights

  • Revenue from operations in Oct-Dec '24 grew by 6.2% YoY to 44,657 million INR.

  • Revenue from operations in April-Dec '24 grew by 5.5% YoY to 131,768 million INR.

  • EBITDA for April-Dec '24 grew by 8.1% YoY to 16,628 million INR.

  • EBITDA margin improved from 12.3% to 12.6% for April-Dec '24.

  • Mobility aftermarket business grew by 8.8% QoQ and 8.5% YTD.

  • Two-wheeler business grew by 23.9% QoQ and 17.5% YTD.

Concerns

  • Profit after tax (PAT) declined from 12.3% to 10.3% of revenue QoQ.

  • PAT for nine months declined from 15.4% to 11.1% of revenue YTD.

  • Provision of 471 million INR made for restructuring in Mobility business.

  • Subdued demand in heavy commercial vehicle segment due to mining/construction slowdown.

  • Muted growth in light commercial vehicles and three-wheelers due to economic slowdown.

Key financials

  1. Revenue (Oct-Dec '24) 44,657 Mn +6.2%YoY
  2. Revenue (April-Dec '24) 1,31,768 Mn +5.5%YoY
  3. EBITDA (Oct-Dec '24) 5,826 Mn +0.7%YoY
  4. EBITDA (April-Dec '24) 16,628 Mn +8.1%YoY
  5. EBITDA Margin (April-Dec '24) 12.6%
  6. PAT as % of Revenue (Oct-Dec '24) 10.3%
  7. PAT as % of Revenue (April-Dec '24) 11.1%
  8. Restructuring Provision 471 Mn

What they filed

Q1 FY27: revenue up 22.0%, net profit down 37.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,394 4,466 4,911 4,789 4,795 +9%4,886 +9%5,566 +13%5,842 +22%
EBITDA560 583 647 639 617 +10%612 +5%782 +21%818 +28%
Net profit536 458 554 1,115 554 +3%532 +16%568 +3%702 −37%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Mobility Business (Oct-Dec '24 vs Oct-Dec '23)
    1.6% Growth
  • Mobility Aftermarket (Oct-Dec '24 vs Oct-Dec '23)
    8.8% Growth
  • Two-wheeler Business (Oct-Dec '24 vs Oct-Dec '23)
    23.9% Growth
  • Consumer Goods Business (Oct-Dec '24 vs Oct-Dec '23)
    8.8% Growth
  • Building Technologies Business (Oct-Dec '24 vs Oct-Dec '23)
    7.6% Growth
  • Mobility Business (April-Dec '24 vs April-Dec '23)
    4.4% Growth
  • Power Solutions Business (April-Dec '24 vs April-Dec '23)
    2.3% Growth
  • Mobility Aftermarket (April-Dec '24 vs April-Dec '23)
    8.5% Growth
  • Two-wheeler Business (April-Dec '24 vs April-Dec '23)
    17.5% Growth
  • Consumer Goods Business (April-Dec '24 vs April-Dec '23)
    8% Growth
  • Building Technologies Business (April-Dec '24 vs April-Dec '23)
    15.1% Growth
  • Building Technologies Division (Overall)
    ₹400 Cr Revenue6% Profit Margin

Capital allocation

high confidence
  • M&A Building Technologies Division Divestment · Ongoing

    Part of a global realignment; strategic decision to streamline portfolio.

    Small business with 400-450 crores revenue and 6% EBIT margin; not a major impact on overall business operations.

    During the quarter, the Company has made a provision of 471 million INR towards restructuring its operations to be competitive in the Mobility business. And the same has been disclosed as an exceptional item for the quarter. Likewise, profit after tax for nine months ending December 2024 stood at 11.1% of revenue from operations as compared to 15.4% over the same period of previous year. The reduction is mainly on account of profit on sale of the PJMS or project house mobility solutions business in the previous year.

Guidance & targets

Profitability

  • Employee Cost as % of Revenue (Steady State) Profitability · steady state · Medium confidence roughly 10%
    Well, in a steady state, of course, also depending on the product mix, we are seeing on the current product mix roughly 10%, I would say. It depends all the time a little bit on the product portfolio which we deliver in this month, 10% on the mid-run is normal figure. Currently we have a very good productivity also, so 8% to 10%.

    — Karin Gilges

Revenue

  • Rental Income Growth Revenue · full year · Medium confidence around 7% higher
    Yes, exactly. So, we could rent out some more offices. And in addition, the adjustment of the market prices for the rental fees.

    — Karin Gilges

Volume

  • After Sales Division Growth Rate Volume · FY26 · High confidence between 8% to 10%
    Yes, we typically expect between 8% to 10%.

    — Guruprasad Mudlapur

What to watch in Q4 FY25

TREM-V implementation date

next quarter
Current Remains April 1, 2026, no further updates
Target Any change or confirmation from the government

Why it matters

Regulatory changes significantly impact product development and market strategy.

No, we do not have any further updates on the implementation date. At least we have not heard of any further changes there.

Risks & concerns

  • Macroeconomic Headwinds

    medium

    Global and Indian macroeconomic uncertainties, disinflation, subdued demand, geopolitical uncertainties, trade conflicts, FPI pullout, weakening consumption, uncertain business sentiment.

    Management acknowledged

  • Segment-Specific Slowdowns

    medium

    Subdued demand in heavy commercial vehicles due to mining/construction slowdown; muted growth in LCVs and three-wheelers due to economic slowdown.

    Management acknowledged

  • Restructuring Costs

    low

    Provision of 471 million INR towards restructuring operations in the Mobility business.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
TREM-V implementation date Direct
No, we do not have any further updates on the implementation date. At least we have not heard of any further changes there.

Regulatory clarity is crucial for product development and market strategy in the automotive sector.

Asked by Pramod Amte

Employee cost as a percentage of revenues Direct
Well, in a steady state, of course, also depending on the product mix, we are seeing on the current product mix roughly 10%, I would say. It depends all the time a little bit on the product portfolio which we deliver in this month, 10% on the mid-run is normal figure. Currently we have a very good productivity also, so 8% to 10%.

Understanding the structural cost base and its impact on profitability.

Asked by Lakshmi Narayanan

Profit contribution and future impact of divesting the Building Technologies division Direct
It's a very small business. About the revenue that goes out is about Rs. 450 crores. We have how much? Rs. 400 crores approximately, that's the revenue that goes out. And the profit is also quite small, it's 6%.

Clarifies the financial impact of a strategic divestment.

Asked by Lakshmi Narayanan

Manufacturing shift from Europe/Germany to India for Bosch Global Direct
Yes, I mean, this is something we constantly assess as you're probably well aware, the Bosch operates in what's called the International Production Network concept. India is well integrated into that the International Production Network and is fully visible in that network.

Indicates potential for India to become a larger manufacturing hub for Bosch globally, impacting future growth and localization.

Asked by Lakshmi Narayanan

Gasoline engine portfolio, content per vehicle, and challenges with new fuels (CNG, flex fuel) Partial
I think it's hard to give a very generic answer on content for vehicle. I think if you are also at the Bharat Mobility show and you said you were, we've showcased our complete portfolio on gasoline injection as well. And that should have given you an overview.

Understanding Bosch's strategy and competitive positioning in the evolving gasoline and alternative fuel vehicle market.

Asked by Pramod Amte

Aftermarket growth drivers and why it's not fully reflecting in profitability/EBITDA margins Direct
All segments of aftermarket have grown quite a bit, especially our diesel components, lubricants, filters, for OEMs and for exports, all segments have grown. We've had very good growth in our aftermarkets. And our margins have been very good with the aftermarkets like always.

Clarifies the strong performance of the aftermarket segment and its contribution to overall EBIT, while explaining why it might not be immediately visible in overall margins due to product mix.

Asked by Pramod Amte

Bosch India's strategy for EV/alternate fuels (hydrogen), R&D, software/hardware, and work for global Bosch Direct
I wish you were present at the Bharat Mobility Show. Whoever asked the question, we would have been able to share. I mean, we shared a lot of our technology demonstrators and products and our software and hardware.

Provides insight into Bosch's long-term strategic investments and R&D focus on future mobility technologies, including hydrogen and electrification.

Asked by Annamalai Jayaraj

Consolidation of automotive businesses in India Evasive
Yes, I mean, I don't want to jump the gun on any information as sensitive as this. If there's any update, we will let you know when the news is allowed to be shared. So, till then, I can't share such information.

Suggests potential significant corporate restructuring or M&A activity that could impact the company's future structure and operations.

Asked by Annamalai Jayaraj

2 min read 6 chapters

Detailed narrative

Q3 FY25 Financial Performance Overview

Bosch Limited reported Q3 FY25 revenue from operations at 44,657 million INR, a 6.2% increase year-on-year. For the nine months ending December 2024, revenue stood at 131,768 million INR, growing 5.5% YoY. EBITDA for the nine-month period improved by 8.1% to 16,628 million INR, with the EBITDA margin expanding from 12.3% to 12.6%. However, profit after tax as a percentage of revenue declined from 12.3% to 10.3% QoQ and from 15.4% to 11.1% YTD, primarily due to a 471 million INR provision for restructuring in the Mobility business.

Segmental Growth Drivers

The Mobility business grew by 1.6% QoQ, largely driven by an 8.8% increase in the mobility aftermarket segment, fueled by higher demand for diesel systems, automotive batteries, and lubricants. The two-wheeler business saw robust growth of 23.9% QoQ, benefiting from increased sales of exhaust gas sensors and OBD2 norms implementation. Consumer goods and building technologies businesses also contributed positively with 8.8% and 7.6% QoQ growth, respectively.

Strategic Investments in Future Mobility

Bosch is actively investing in advanced engineering solutions for future mobility, including electric vehicles and alternate fuels like hydrogen. The company highlighted its significant R&D investments, with over 2.5 billion EUR in fuel cell developments and 7-8 billion EUR in electrification over the past 10-15 years globally. Bosch India leverages its strong design-to-manufacture capabilities and the Bosch Software Development Center (BGSW) with 25,000 engineers to drive innovation locally and globally.

Divestment of Building Technologies Division

As part of a global realignment, Bosch is divesting its Building Technologies division. This is a relatively small business for Bosch India, contributing approximately 400-450 crores in revenue with an EBIT margin of about 6%. Management stated that this divestment is not expected to have a major impact on the company's overall business operations, as the global division has been sold to venture capitalist Triton, and the India portion is being transferred to a subsidiary before being taken back by Triton.

Macroeconomic and Market Outlook

The company acknowledged global and Indian macroeconomic uncertainties, including disinflation, subdued demand, geopolitical tensions, and FPI pullout. Domestically, growth is expected to slow cyclically with weakening consumption. While the automotive industry grew 3% YoY in Q3 FY25, sequential decline was noted due to seasonal cyclicality and post-festive demand normalization. The heavy commercial vehicle segment remained subdued, and LCVs/three-wheelers experienced muted growth.

Aftermarket Performance and Outlook

The aftermarket segment demonstrated strong growth across all sub-segments, including diesel components, lubricants, filters, and exports, with management confirming 'very good margins' in this area. For FY26, the after-sales division is expected to grow between 8% to 10%. Despite strong aftermarket performance, its full impact on overall EBITDA margins was partially offset by product mix changes, including slightly lower sales in power drain solutions in the current quarter.

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