Momentum Pick: 34% gains in 1 year, Bosch poised for next round of rally?

Bosch has outperformed the Nifty50 and given returns of over 34% over a 1 year period versus 0.6% returns given by the Nifty50 during this period. The stock has been on a gaining spree over the past four trading sessions and the rally is likely to continue in the near term. The stock price has potential to go up between 14 and 18% based on the current momentum and strong fundamentals.

Bosch shares on Friday ended at Rs 19,200 on the NSE and were up by Rs 222 or 1.17% from the previous closing price.

Bosch Group is a global automotive supplier of technology and services in mobility solutions, industrial technology, consumer goods, and energy and building technology. It has 18 manufacturing sites and seven development and application centers.


Technical View
Pravesh Gour on Bosch: Buy | CMP: 19,200 | Target: 22,000 | Stop Loss: 18,000 | 14%

Pravesh Gour Senior Technical Analyst at Swastika Investmart Ltd sees a potential gain of Rs 2,800 per share or Rs 1,400 on the current market price.

“On the longer timeframe, the Counter has given a breakout of long trend line resistance at around Rs 18,000 levels with strong volume. It has also witnessed a breakout of an ascending triangle formation on the daily chart,”, Pravesh Gour Senior Technical Analyst, Swastika Investmart Ltd said.

“The overall structure of the counter is lucrative, as it is trading above its important moving averages. MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised.

“On the higher side, Rs 21,000 is acting as an important psychological level; above this, we can expect a level of Rs 22000+ in the near-short term, while on the lower side, Rs 18,000 will act as a major support during any correction.

Investors with a short term view must watch out for the volatility. 1-year beta of this automotive component maker is at 1.01 according to data sourced from Trendlyne which indicates average volatility.

Fundamental View
Sharekhan: Buy | Target: 21,929 | Upside: 18%

Sharekhan maintains a buy on Bosch with a revised price target of Rs 21,929. The company, it said, is expected to be a key beneficiary of the implementation of stringent emission norms in the domestic automotive market owing to its strong technology expertise, given the implementation of new norms provides it an opportunity to expand its value added offerings which translates into increased content per vehicle.

Bosch can cater to the alternate fuel segment, including EV, hydrogen, and others while it maintains its strong dominance in the traditional fuel segment, the brokerage noted.

Company’s strong brand positioning, focus on technology, and electrification of vehicles to hold the company in good stead and enable high-growth visibility, Sharekhan further said.

The company’s order book remains buoyant, providing growth visibility, it said.

The stock trades at a P/E of 25.3X and EV/EBITDA of 16.9X its FY2025E estimates, the report added.


Valuation

Key Risks
Performance may be affected if commodity prices increase in the future. In addition, a shortage of semiconductors can materially affect our revenue and margin projections.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)