26 Jun , 2022 By : Kanchan Joshi
With a market valuation of Rs42,078 crore, Bosch Ltd. is a large-cap corporation that operates in the auto ancillaries industry. Bosch Ltd (Bosch) offers products and services in the fields of consumer goods, energy, and building technology. The stock has gained 7.44 per cent over the past five trading days, and on Friday it closed at Rs14,300 on the NSE, up 3.46 per cent from the previous close. The company is almost debt-free and the high promoter shareholding of 70.54% is constant for the company for the last 3 years. With a target price of Rs. 15500 and a stop loss of Rs. 12700, brokerage company ICICI Securities is bullish on the stock. The stock has a potential upside of almost 9% from the brokerage's defined buying range of 13900-14250 with a goal period of three months.
According to ICICI Securities “Auto and auto ancillary space has been exemplary in its relative outperformance amid recent market corrective phase. Within ancillary stocks, Bosch has undergone significant price/time correction over past six years. Technically, at the current juncture the stock provides extremely favourable riskreward setup from a medium term perspective."
Being bullish on the shares of Bosch, ICICI Securities has said in a note that “The share price has halted its decline and formed a potential double bottom bullish reversal pattern as May 2022 low of 12900 has been held again in June 2022 indicating supportive efforts emerging consistently at 50% retracement of entire 2020-21 rally (7850-19250) that also coincides with major swing lows of May and June 2021. Structurally, share price retraced its 11 week’s rally (13412-19250) over eight months. Slower pace of retracement indicates that inherent strength is slowly returning in the stock."
The brokerage has further claimed that “Weekly RSI has formed a positive divergence against its own May low and also given a breakout above falling trend line, which is in force since October 2021 showing early signs of a revival in upward momentum. We expect the share price to initially head towards 15500 over the next few months, which is 38.2% retracement of past eight month’s fall (19250-13000)."
Building in the positives driven by recovery in the volumes in the auto space particularly CV segment, we expect topline at the company to grow at a CAGR of 16.5% over FY22-24E with operating leverage gains seen aiding margin improvement to 13.5% by FY24E. PAT growth in the aforesaid period is placed at 18?GR with consequent RoCE expected at 14% and core RoIC at 46%, said ICICI Securities by valuing the stock at ~25x PE on FY24E.
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