Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain REDUCE on Siemens - Smart recovery priced in - HDFC Securities

Posted On: 2020-12-01 06:02:38 (Time Zone: Arizona, USA)


Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

We maintain REDUCE on Siemens India Ltd. (SIL) and roll forward TP (Rs 1,370) to Dec-22 (35x). We upgrade FY21E/22E/23E EPS on account of improved margin profile. SIL delivered Revenue/EBIDTA/APAT beat of 31/37/33%. After a washout 3QFY20, margins across all segments improved both YoY and QoQ, driven by higher services and exports in the revenue mix (low base of revenue for FY20). Coming two quarters will give a better visibility on sustainability of improvement in EBIDTA margins of 12.9% (+305/+1350bps YoY/QoQ) in 4QFY20. SIL has indicated good margins in order backlog backed by corrective cost optimization measures and some of it sustaining.

Smart recovery: SIL delivered Revenue/EBIDTA/APAT beat of 31/37/33%. EBITDA margins came at 12.9% (+305/+1350bps YoY/QoQ) vs est of Rs 12.3%. Higher margin was driven by both cost rationalization efforts, as well as better mix in Energy & Mobility segments. Service mix improved significantly to 17.7% in FY20 from 11.6% in FY19. Exports mix improved as well to 24.1% in FY20 vs 18.4% in FY19, as exports were relatively stable amidst a strict domestic lockdown (though on low base of FY20). Both services and exports have higher margin profile. While factories had been operating with ~75% manpower (all 22 open) in 4QFY20, project sites saw ~85% personnel mobilization.

Book to bill continues to be at 1x (of FY21E revenues): SIL has a strong order backlog of over one year's revenue, with new orders during 4QFY20 at Rs 32.2bn. We estimate FY20 order backlog to be at Rs ~128bn. OB has good margins, and margin quality is expected to sustain, as per SIL.

Hiving of the Mechanical Drives Business: SIL has divested Mechanical Drives (MD) business to Flender Drives Private Limited, an indirect subsidiary of Siemens AG. Divested MD business contributed Rs 2.1/6.7bn to the top-line, and loss of Rs 55/9mn to the bottom-line (loss from discontinued operations) in 4QFY20/FY20. MD contributed 6.4% to FY20 revenue and 64% of POC segment revenue. Large non-wind mechanical drives and motors will continue to be part of SIL POC business. Sale of less profitable business augurs well for SIL.

Industry outlook: auto sector isn't likely to see good offtake in the near term from fresh investments perspective. Verticals like pharma, F&B and T&D saw good uptick. Water/irrigation, metros/railways, warehousing, electronics, etc. are some other sectors SIL will focus on. Metals and chemicals sectors are expected to commit capex in near term. Waste heat recovery projects from cement & industrial cogeneration plants have also seen uptick. Utilities and hospitality continue to defer capex. While short cycle and services/digitization businesses continue to do well, large project orders will be muted due to lower capacity utilization.

Shares of SIEMENS LTD. was last trading in BSE at Rs.1516.65 as compared to the previous close of Rs. 1513.9. The total number of shares traded during the day was 42942 in over 2872 trades.

The stock hit an intraday high of Rs. 1544.9 and intraday low of 1489.55. The net turnover during the day was Rs. 64987723.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

IPO Review - Indian Railway Finance Corporation (IRFC) - ICICI Direct

HCL Technologies - Q3FY21 First Cut - ICICI Direct

Logistics Sector Update - Indian Railways - getting aggressive - HDFC Securities

Indigo Paints - IPO view - YES SECURITIES

Infosys - Near-term margins will likely come under pressure - ICICI Securities

CESC - 7% dividend yield + higher ESG rating - ICICI Securities

South Indian Bank - Unveils vision 2024; targets RoA / RoE of 1% / 13% by 2024 - ICICI Securities

Maintain BUY on Infosys - Growth certainty on explosive deal wins - HDFC Securities

Maintain ADD on Wipro - Growth acceleration - HDFC Securities

Consumer Durables - Q3FY21 Results Preview - HDFC Securities

Q3FY21 Company Update - Filatex India - ICICI Direct

Q3FY21 Result Update - Wipro Ltd - ICICI Direct

Q3FY21 Result Update - CESC - ICICI Direct

Monthly Inflation - December 2020 - ICICI Direct

Q3FY21 Result Update - Infosys - ICICI Direct

Banks Q3FY21 Results Preview - Scope for optimism beyond a tepid 3Q - HDFC Securities

Consumer Discretionary Companies - Q3FY21 Results Preview Report - HDFC Securities

Pharma Sector Update - Ample catalysts to sustain luster - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on IIP data

Infosys - Q3FY21 First Cut - ICICI Direct

Wipro - Q3FY21 First Cut - ICICI Direct

HDFC Securities - Real Estate Q3FY21 Results Preview - Has COVID triggered a new cycle?

Industrials Q3FY21 Results Preview - Normalisation done, growth awaited - HDFC Securities

FMCG & Alco Bev - Q3FY21 Results Preview - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on December 2020 CPI Data

Cement & Building Materials (Tiles) - Results Preview - Robust Performance on Improved Volume - Reliance Securities

Automobile & Auto Ancillary - Results Preview - Strong Results on Healthy Volume Performance in 3QFY21 - Reliance Securities

Q3FY21 Result Update - Tata Consultancy Services - ICICI Direct

Q3FY21 Result Preview - Real Estate & Infrastructure - ICICI Direct

Q3FY21 Result Update - Avenue Supermarts - ICICI Direct

Q3FY21 Result Preview - Metals & Mining - ICICI Direct

Insurance and Capital Markets Companies Q3FY21 Results Preview - Stronger earnings expected across sectors - HDFC Securities

Capri Global Capital - Getting back to normalcy - ICICI Securities

Avenue Supermarts - Fast recovery; there are speed breakers though - ICICI Securities

Tata Consultancy Services - Steady state growth / margins are yet to be seen! - ICICI Securities

Q3FY21 Result Preview - FMCG - ICICI Direct

Cement Sector - Q3FY21 Results Preview - HDFC Securities

Avenue Supermart Q3FY21 Results - Views of YES SECURITIES

The Phoenix Mills - Festive season ushers in consumption revival - ICICI Securities

Quant Pick - Zee Entertainment - ICICI Direct

Q3FY21 Result Preview - Auto and auto ancillary - ICICI Direct

Q3FY21 Result Preview - Capital Goods & Power - ICICI Direct

Q3FY21 Result Preview - Consumer Discretionary - ICICI Direct

Q3FY21 Result Preview - Banking & Financial Services - ICICI Direct

Q3FY21 Result Preview - Cement - ICICI Direct

Stock Tales - Esab India - ICICI Direct

TCS - Q3FY21 First Cut - ICICI Direct

NHPC - Receivables decline; pending issues cleared - ICICI Securities

ICICI Securities - Telecom - Bharti Airtel to outperform yet again...

Cement - Yet another strong quarter; upgrades to continue - ICICI Securities



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020