Geojit Financial Services Views on Midcap Autos - Bosch Ltd, Punjab Tractors

Bosch Ltd

Bosch Ltd is a big player in the auto ancillary industry and is one of the four companies operating under the Bosch Group. With the launch of the Tata Nano and a number of other investments by domestic and foreign auto manufacturers such as General Motors and BMW, the auto parts industry is slated for healthy growth over the next two-three years. Bosch with its variety of business divisions such as Diesel Systems, Gasoline Systems, Chassis Brakes, Automotive Accessories and others stands to gain tremendously from the growth in the passenger car sector. 70% of the company's stock is held by its promoter Robert Bosch GmbH, 20% by FIIs while around 10% is held by the public. The stock, currently trading at Rs.3898.35 (as of Oct.03 2008), has traded at a 52-week high of Rs 5890. Sales growth for the quarter ended June 2008 has been 14.57% year-on-year. Net Profit has grown impressively for the quarter ended June 2008 by 33.77% year-on-year.

Punjab Tractors

Punjab Tractors, which is a subsidiary of Mahindra & Mahindra is engaged in the field of manufacturing, marketing and servicing of tractors and is showing continuous growth for the last quarters on growth in its top line and bottom line figures. Even in the rising inflationary scenario of high raw material prices, company is satisfying its investor expectations, due to its focus on increased retail sales and enhanced retail financing support from Mahindra & Mahindra Financial Services. Sales for the quarter ended June'08 has shown a growth of 81% versus June'07 and a fantastic bottom line growth of 580% respectively. EPS of the company has risen by 583% for the same period. In addition agricultural industry which has been recovered on the farm debt waiver scheme from the union government will boost rapid expansion of company's sales in the coming months. It will be a good bet on Punjab Tractors at current levels.