Bosch shares falls 3% after stock split, bonus issue, Q2 results announcement | What should investors do?
Bosch share price tumbled over 3% in Monday's trading session after the company announced 1:5 stock split and a 3:1 bonus issue and strong set of numbers during the July-September quarter for FY27.
The stock also plunged amid weak sentiments on Dalal Street. Indian equity benchmark indices, Sensex and Nifty, opened lower on Monday, weighed down by selling pressure in heavyweight IT stocks and profit-booking following the recent sharp rally in the domestic market. The 30-share BSE Sensex fell 93.95 points to 80,919.19 in early trading, while the 50-share NSE Nifty slipped 30 points to 24,968.80.
Bosch shares opened at ₹50,985 per share on NSE today, as compared to previous close of ₹50,800 on Sunday (Muhurat Trading) and touched an intraday low of ₹49,105 on 9 November.
Bosch board of directors last week approved a stock split in the ratio of 1:5. Under this arrangement, each existing equity share with a face value of ₹10 will be subdivided into five shares with a face value of ₹2 each. The proposed stock split will be implemented after receiving shareholders' approval through a postal ballot.
The stock split will be followed by a bonus issue, meaning that an investor holding one Bosch share before the corporate actions will first see their holding increase to five shares after the split. Subsequently, under the bonus issue, the investor will receive 15 additional shares, taking the total holding to 20 equity shares of ₹2 face value each.
In addition to the stock split, Bosch's board has approved a bonus issue in the ratio of 3:1. This means eligible shareholders will receive three additional fully paid-up equity shares of ₹2 face value each for every one existing equity share of ₹2 face value held on the record date.
Bosch posted an 18.6% year-on-year growth in net profit at ₹839.4 crore in Q2 FY27, compared with ₹708 crore in the corresponding quarter last year. The reported profit includes a one-off gain of ₹130 crore.
Revenue from operations surged 28.2% year-on-year to ₹7,655 crore in the September quarter, against ₹5,969 crore in Q2 FY26.
The company's earnings before interest, tax, depreciation and amortisation (EBITDA) rose 23.2% year-on-year to ₹1,037 crore from ₹842 crore in the year-ago period. However, EBITDA margin narrowed to 13.5% from 14% in the corresponding quarter of the previous fiscal year.
During its earnings call, Bosch cautioned that operating conditions could remain challenging in the second half of FY27, with inflationary pressures, below-normal monsoon conditions and higher interest rates potentially affecting demand.
The company expects the two-wheeler segment to register flat to modest growth in Q3 FY27, partly due to an unfavourable high base effect.
On the margin front, Bosch expects its RBIC business margins to improve after potentially another quarter. However, recovering higher input costs through price hikes may take time due to delays in passing on the additional costs to customers. While the company will strive to recover the entire cost increase, it cautioned that full cost pass-through is not assured.
Brokerage firm Motilal Oswal has reiterated its ‘Neutral’ rating on the Bosch stock with a target price of ₹47,200, seeing a downside of over 7%, saying that the firm has cut down its FY27 earnings estimate by 6%.
“Due to weaker-than-expected margins in 2Q in the standalone business and margin headwinds in the RBIC business, we cut our FY27 earnings estimate by 6%. We project BOS to clock a 27%/35%/20% CAGR in revenue/EBITDA/PAT over FY26-28. However, the stock at 51x/44x FY27E/FY28E appears fairly valued. We reiterate our Neutral rating with a TP of INR47,200 (based on ~41x FY28E EPS),” the firm added.
Vaamanaa covers business and stock market news. Started in 2020, she has been producing news on digital platforms for over 4.5 years now. She writes on markets, commodities, IPOs, and industry. She has worked for news channels like Jagran New Media and Business Insider India. You can reach out to her at vaamanaa.sethi@htdigital.in.
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HomeMarketsStock MarketsBosch shares falls 3% after stock split, bonus issue, Q2 results announcement | What should investors do?
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