Bosch Limited (BOSCHLTD.NS) Earnings Call Transcript & Summary

Good day, and welcome to Bosch Limited 2Q, FY '25-'26 Post-result Conference Call, hosted by by B&K Securities. From Bosch management, we have with us today Mr. Guruprasad Mudlapur, Managing Director and Chief Technology Officer; Ms. Karin Gilges, Chief Financial Officer. [Operator Instructions] Over to you, sir. Thank you.

Good morning, everyone, and thank you for being part of this call. Today, I will begin with a brief on the global and Indian macroeconomics. This will be followed by an automotive market update, after which we will walk you through our financials. Finally, we'll conclude with key business highlights for the quarter. The global stage sets clear challenges from tariff pressures to geopolitical unrest, influencing market sentiments worldwide. However, the Indian economy is demonstrating powerful resilience supported by strategic policy measures and anticipated consumption growth with slight concerns on fiscal slippages. Last quarter has unfolded as a quarter of contrast with mild global optimism tempered by financial concerns at home. The IMF lifted its 2025 global GDP forecast to 3.2%, citing robust U.S. and Indian momentum even as growth elsewhere lagged. The Fed's 25 basis point rate cut and softer U.S. 10-year yield of 3.95%, reinforce the soft landing narrative, which eases concerns globally to some extent. Closer home, India delivered a stellar Q1 FY '26 GDP of 7.8%, prompting the RBI to maintain rates at 5.5%, while turning mildly dovish over lower inflation estimates. However, weaker tax inflows and elevated CapEx spending, kept fiscal discipline and focus even as liquidity oscillated, Strong festive spending, on back of GST cuts is expected to assist robust tax collections in the coming months. We are confident in our ability to navigate these cross currents, optimizing our operations to capture growth from India's buoyant domestic demand, particularly within the auto sector and deliver consistent value. The Indian auto industry saw steady growth across all segments this quarter. healthy demand for passenger vehicles, particularly SUVs and EVs, strong rural interest for 2-wheelers and consistent commercial vehicle sales all contributed. Notably, the September GST reforms significantly boosted affordability and pre-festive buying. The July-September quarter for Indian Passenger Vehicles began slowly marked by cautious supply and weak buyer sentiment awaiting GST reforms. However, tax cuts and festive demand in the late September triggered a sharp rebound, predominantly driven by SUV sales as smaller cars and Sedan segments remained under pressure. The Commercial Vehicle segment delivered a robust and steady performance this quarter, driven by stable production, strong infrastructure projects and improved financing. Lower GST rates and overall sector optimism further bolstered momentum ahead of the festive season. This quarter saw a strong growth in LCV sales as well, primarily driven by the GST 2.0 rollout, the festive season and sustained demand for the E-commerce segment. The 3-wheeler segment recorded record production levels this quarter, driven by robust demand, early festive momentum and sustained by strong urban mobility and last mile delivery demands. The Tractor segment recorded strong growth, fueled by above normal monsoons, a robust Kharif Harvest and stable policy rates. Improved rural cash flows, healthy sowing, easier credit and GST revisions further bolstered demand and affordability. The 2-wheeler market experienced steady growth burned by a good monsoon, strong rural demand and festive sentiment. Late September's GST rate revision further bolstered affordability, triggering pent-up purchases. In this slide, we have illustrated the market trajectory across FY '24, FY '25 and FY '26. Along with highlighting the peak volume peaks achieved for each segment. The Passenger Cars growth is projected to reach an all-time high in FY '26. This search is expected from new model launches and a proposed GST overhaul, which is anticipated to reduce prices for almost 1/3 of the industry by 8.5%, significantly boosting affordability and demand, especially during the festive season. The Commercial Vehicle segment anticipates gradual growth in FY '26. Demand will be bolstered by sustained infrastructure development and replacement needs for older vehicles. While LCVs benefit from economic activity and e-commerce, medium and heavy commercial vehicles are poised for a gradual recovery, supported by policy, seasonal demand and stable freight. The Tractor market is projected to reach an all-time high fueled by strong rural sentiment, favorable monsoon forecast, GST norms and rising minimum support prices for key crops. Demand is expected to remain buoyant, even post festival season, driven by these GST reforms. The 2-wheeler segment is projected to reach an all-time high, driven by steady replacement demand under robust urban consumption revival. Healthy rural incomes from a normal monsoon, along with recent GST rate cuts will boost affordability and purchases. Easing inflation improving rural sentiment and rising disposable incomes further strengthened by individual tax rebates are set to fuel strong consumer confidence and demand. The 3-wheeler segment in India is poised for steady growth in FY '26, supported by goods transport and passenger services. GST rate reductions and festives season incentives are expected to enhance affordability while accelerating EV adoption is driving a shift towards cleaner mobility. With rising passenger volumes and expanding last-mile connectivity solutions across both urban and rural areas, this segment is set for sustained momentum throughout the year. Now segment-wise sales performance. Quarter-on-quarter, the Mobility business has grown by 11.9% in September -- July to September '25, and as compared to July to September '24, driven mainly from the Power Solutions business, which grew by 9.5% on account of higher demand for diesel components mainly from passenger car and off-highway segment. The mobility aftermarket recorded a growth of 3.7%, driven by diesel and filter systems. GST 2.0 had an impact on Mobility aftermarket turnover in Q2 due to liquidation of existing stocks by the dealers. Sales is expected to regain momentum again in Q3. 2-wheeler business grew by 81.8%, mainly on account of high sale of exhaust gas sensors resulting from implementation of OBD-II norms starting 1st of April 2025. The Consumer Goods business grew marginally by 1.8%. The Mobility business has grown by 13.1% in April to September '25, as compared to April to September '24, mainly -- driven mainly from the Power Solutions business, which grew by 11.5% on account of higher demand for diesel components mainly from Off-highway and Passenger Car segments. The Mobility aftermarket business grew 4.5% despite lesser sales in Q2 FY 2025, '26, resulting from GST rate cuts. The increase is mainly coming from growth in diesel components and filter systems. As already seen in quarter-on-quarter growth, the 2-wheeler business has grown significantly due to ramp-up in sale of exhaust sensors resulting from OBD-II norms implementation from 1st of April 2025. The Consumer Goods business grew by 5.4%. The growth is contributed by new launches in entry and mid-price segment -- product segments, measuring tools and outdoor garden equipment. Quarter-on-quarter, revenue from operations in July to September 2025 stood at INR 47,948 million, which grew by 9.1% over July to September 2024. The growth was driven mainly by higher sales in Power Solutions and 2-wheeler Power Sports segments as seen from the previous slide. Likewise, the revenue for the period April-September 2025 grew by 10% over April, September 2024, from INR 87,111 million to INR 95,834 million. This growth was driven by strong performance in Power Solutions and 2-wheeler and Power Sports segments. EBITDA for July, September '25 was INR 6,171 million, which grew by 10.1% over the same quarter of previous year. This improvement in EBITDA margin was primarily driven on account of favorable product mix and optimization of expenses. EBITDA for the period April-September 2025, was INR 12,564 million, as compared to INR 10,802 million in April, September 2024, which grew by 16.3%. The increase in EBITDA is on account of growth in revenue, accompanied by lower material cost. The profit after tax for July, September '25, grew by 3.4% over the same quarter of previous year. July, September '24 had an exceptional item through the profit on sale of OE Diagnostics business of INR 485 million. The profit after tax without this exceptional item in July, September 2024 quarter, has grown by 11.2%. The profit after tax for 6 months ending on September 2025 stood at INR 16,696 million, which is a growth of 66.7% over the same period of previous year. The significant growth impact is mainly due to the profit on sale of the video solutions, access and intrusion and Communication Systems business and Building Technologies segment. I will now walk you through key highlights in each of our business divisions this quarter. [indiscernible] To be recognized by our customers and the industry for our outstanding performance. This quarter, we received prestigious awards for excellence in on-time delivery and supply reliability. And for our pioneering innovation in hydrogen internal engine combustion engine technology, this consistent recognition underscores our commitment to quality and leadership. Furthermore, this quarter marks the 25th anniversary of our Technical Center India, TCI, a testament to our enduring commitment to innovation. Moving into the 2-wheeler and Power Sports segment. This quarter, we truly redefined gas shifting technology. Our sensorless quick shift technology made its debut in the Indian market, marking yet another step towards delivering smoother, smarter and more efficient mobility solutions. And here is something we are really proud of. A first for India. The TVS Ntorq 150 with Bosch's Lambda sensor realized in our Bidadi plant. Our collaboration with TVS helped redefine the system further and the positive feedback we received from Bajaj Tech paved the way for its successful deployment in the Bajaj Pulsar NS400z. Adding to our achievements this quarter, Bosch was honored with Hero MotorCorp's prestigious Hero premium Leader award, recognizing our commitment to excellence and partnership. In the Mobility aftermarket division, we are anticipating strong momentum recovery post GST 2.0 transition next quarter. Our strategy is clear, we are actively leveraging our robust portfolio strengths, maintaining strict cost discipline and focusing on margin stability. Crucially, we are expanding our product portfolio aligned with market demands. In the Power Tools division, our new product launches driving this expansion, particularly in special categories like hand tools and outdoor garden where we have seen impressive market traction, further boosting performance. Our e-commerce channel delivered high double-digit growth, thanks to the successful festive offers, affirming our strong digital strategy and customer reach. Finally, strategic cordless 2.0 initiatives are accelerating and accelerating the adoption of advanced cordless technology through effective tactical interventions, solidifying our position in power tools innovation. Thank you all for your contribution and for listening patiently through the call. We will now address your queries. Thank you, and we are open for questions.

[Operator Instructions] The first question is from Pramod Amthe.

So wanted to check on this consumer division, even though it's relatively small than for you. What is leading to such a slow growth? And as the profit damage seems to be much severe where profits have come down from INR 40 crores to INR 12 crores. Is it more one-off? Or you feel you need to get some major action to bring it back?

If I understand right, the question was on the Consumer Goods business, which grew marginally. Yes. So I think there has been slightly lower than expected growth in our Consumer Goods business. We do not see this as anything structural internally. We have an extremely good product mix and a product range. We see a reduction mainly on account of adverse exchange rate movements, resulting in slightly higher material cost. We also see, again, a little bit of an initial slowdown on account of GST reforms and then now after that ramp up again. So we don't see this as a major dip, and we should see this picking up again moving forward.

And second one is with regard to the automotive, even though the sales traction has definitely improved. There is still a lot of wobbliness in terms of purchased goods, how to see it -- is one. And second, there seems to be better participation now in the 4-wheeler EV side. Is it time to call out how the EV penetration is improving automotive for you or you feel it's too early?

I would answer first to the part of the material cost. So yes, you are fully right, they have improved in the material cost. So one reason is we had a favorable product mix. And we could also -- the share of manufacturing goods was quite good in this quarter. That means our strategy of further localization is now coming through. And this is then finally resulting that we made a good progress in the material costs.

On the EV yes, I think we have made steady progress, and we will soon update you on some of the bigger updates that we have in terms of business opportunities. But at this point of time, I can assure you that the progress has been steady and we are moving towards a better business in the EV side. The margin pressure will remain, its tough entry business right now. but we will see how to make this better as we go along.

Next to Mr. Pramod, Pramod Kumar.

Sir. My first question is regarding the ABS for 2-wheeler, sir. If you can just help us understand at the group level, how are we positioned on the ABS bit. And also, what is your expectation on the ABS mandate. Apparently, today, there's important meeting in Delhi to discuss this mandate. And what we pick up from media is that the government is not very keen to kind of delayed significantly. So if you have broad thoughts on the industry level preparedness to comply with such a norm and what could be the time for complete localization of the entire capacity? So if you can just help us understand that at the macro level, sir.

Yes. So as you're probably aware, our sister company is one of the market leaders in ABS for 2-wheelers. And we do quite a lot. And we are not -- I mean the 2-wheeler division sells it for us. The -- in terms of capacities, we are very well prepared to handle the increased demand that's likely to come out of any changes in legislature. On the legislation itself and on the thinking, we will leave it open for the right authorities to decide and will only hope that it comes out good for the industry and for the users as well. So right now, I do not want to get into a speculation on which way the mandate will go. But if the mandate gets implemented as in a draft, we are very well prepared to handle that.

Good to hear that. My next 2 questions are on the Non-ferrite motors and on hybrid systems. On Non-ferrite motors, some of your competitors have also talked about breakthroughs on the non-ferrite motors. Just want to understand Bosch Group's preparedness on the same. And at the same time, the last question is a hybrid system, sir, on the passenger vehicle side. We are seeing more and more pull for hybrids in the marketplace and with even players who are earlier not very keen on doing hybrids, talking about extensive launch pipeline in to the technology. So given your dominant position in Europe, if you can just help us understand how are we placed in the Indian context? Any any existing relations that we have on the hybrid systems or the pipeline? If you could just share some broad thinking there, sir?

Yes. So on non-ferrite motors or motors without rare earth magnets, there are multiple options here. We are currently exploring all options. And we're working -- we have a certain non-heavy rare earth magnet motors already prepared for the Indian market. But of course, we will also look at nonferrous magnets as well as we go forward. So this is currently work in progress for us, and there is a good feeling that we will have something ready very soon. On hybrids, our position is quite clear. We have a lot of technology for the hybrid segment. We offer this to several OEMs globally, and we are very open to doing that in the Indian market as well. And we are in discussion with all the OEMs locally.

And sir, before I go, any update on Nexteria because it seems to be fixing itself the issue. Any update you want to provide there?

Yes. I mean, it's still a little tentative. But at this point of time, as you've probably read in the newspapers and many other reports, the issue is resolving well, and we hope to have a good resolution on this. And the supplies to be back to normal. But at this point of time, we would like to be -- play it very cautiously because it's still touch and go in terms of supply. So we need to play it very cautiously.

In the meantime, I'll read some questions from the chat box. So first question is, what will be the growth levers for both Automotive and the Consumer segment going forward?

Okay. So we've discussed this several times in the past. This is a pretty generic question in that sense. In the Auto, we've largely been led so far by growth in -- I mean, growth due to legislations. I think we are moving from that phase into growth based on features and comfort and many other factors, safety, for example. So this is something that's an ongoing exercise for us. Content per vehicle will increase. Of course, electrification is an area, additional clean fuels, hybrid, hydrogen, flex fuels. These are all new areas where we are likely to see growth. And we are very positive about the growth opportunities. In addition to general volume increase, which is expected to be on a very good track now that the GST reforms also help us in a positive way. On the Consumer side, I think the large amount of demand has always been due to the excellent growth in infrastructure activities in India. And both construction and mining and many other activities have contributed significantly to demand in our Consumer Goods division and Power Tools growth in this context has continuously increased and we hope to keep this momentum as we go forward.

Next question is what are the regulatory norms, which we could see impact in the near term -- in the short to medium term for us?

May I start?

Yes, go ahead.

So perhaps in the norm, was, of course, a very an important norm for us was from 1st of April on what we have the OBD II. But we also see in the very good growth in the 2-wheeler. We expect this is going ahead for the next 2 quarters. And then it is normalized, let's say, this was a very important implementation for us. And of course, Google, perhaps TREM V, you would like to add?

TREM V is something which is on the horizon for quite a while. So let's hope that, that comes through. I think in terms of other push, it could be electrification, more growth in electrification is anyway on the cards. Not necessarily regulation related, but due to clean mobility kind of a requirement so that we see some additional growth coming in.