Bosch has announced that it will suspend manufacturing at the Bangalore and Jaipur plants in October 2013 in a phased manner. While the operations at the Jaipur plant will be shut on October 12, 19, 28 and November 2, the Bangalore plant will remain closed on October 15 and 31. This is the third straight month during which the company has announced suspension of manufacturing activities at the plants.
The shutdown has been announced in the wake of the slowdown in demand and to avoid buildup of inventory and align the production in-line with the market demand. The domestic automotive industry remains the primary driver of company’s revenue and weak domestic demand on account of sluggish economic growth, increasing fuel prices and weak consumer sentiments has affected the company’s operating performance so far in CY2013. At Rs. 8,700, the stock is trading at 21.3x CY2014E earnings. We maintain our Neutral rating on the stock.
Source: Equity Bulls