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Motilal Oswal Report
What is the transaction?
Bosch Ltd. approved the acquisition of 100% stake in Bosch Chassis Systems India, which is one of the market leaders in automotive safety and braking systems.
The acquisition is valued at Rs 9,070 crore, based on 10.6 times FY25 EV/Ebitda, suggesting the deal is attractively priced for minority shareholders when compared to the listed entity (trading at 40.6x FY26E EV/EBITDA). As per the company, this acquisition will lead to EPS accretion of 5% on FY25 basis. The deal is expected to be completed by Q1 FY27.
Rationale of the acquisition
The brokerage noted that there is a growing need to integrate businesses and product portfolios together to deliver platform-level solutions to customers, as the mobility landscape in India is set to evolve radically by 2030 and beyond.
Hence, effective January 01, 2024, Bosch realigned its global mobility business as Bosch Mobility. This transaction empowers Bosch to drive growth with a wider portfolio and combined offerings across the mobility tech stack. The acquisition will enable Bosch to transition from selling individual mechanical components to providing an enhanced range of solutions to OEMs.
Valuation and view
The brokerage have now incorporated RBIC into its estimates wef FY27E, which leads to a 5%/7% earnings upgrade for FY27E / FY28E.
While this acquisition is favoring minority shareholders, the stock has already rallied almost 19% in the last three trading sessions and now appears fairly valued at 40x/35.7x FY27E/FY28E EPS.
Motilal Oswal maintains Neutral with a revised target price of Rs 35,323 – valued at 36x Dec'27E EPS.
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