ADD on Siemens - Strong performance - HDFC Securities

Mr. Parikshit D Kandpal, CFA, Institutional Research Analyst, HDFC Securities, and Mr. Nikhil Kanodia Institutional Research Analyst, HDFC Securities.

Siemens India Ltd (SIL) delivered Q4FY22 revenue/EBITDA/APAT of INR 43.3/4.7/3.9bn, beating/ (missing) our estimate by (2.4)/(7)/0.2%. Despite inflationary headwinds, better pricing led to an EBITDA margin of 10.8%(+12/+116bps YoY/QoQ) vs. our estimate of 11.4%%. Overall, the order inflow (OI) for the quarter was strong at INR 40.1bn (+25.3/-19.6% YoY/QoQ), taking the order book (OB) to INR 171.8bn (~1.2x FY22 revenue). There was strong ordering across the business segments, particularly in the mobility segment. Decarbonisation as a theme is triggering new brownfield Capex so as to reduce carbon footprint and improve energy efficiency. Government and private Capex will drive growth. SIL stands to benefit from such ordering. We have recalibrated our estimates to factor in a strong order book. We continue with our ADD rating on SIL, with an increased TP of INR 3,111 (rolled over to 46x Sep-24 EPS). Global headwinds, including geopolitical tensions, high inflation, rising interest rates, and supply chain constraints continue to remain the key risks to our thesis.

Q4FY22 financial highlights: Revenue came in at INR 43.3bn (+8.3%/+11% YoY/QoQ, a 2.4% miss), driven largely by mobility, smart infra and energy. All segments other than digital industries (DI) recorded sequential growth with energy/smart infra/mobility (MO)/DI/others recording revenue at INR 16/14/4/9.4/0.4bn, sequential growth of 12%/16%/10%/-5/118% respectively. EBITDA was INR 4.7bn (+9.5%/+24% YoY/QoQ, a 7% miss). EBITDA margin was 10.8%(+12/+116bps YoY/QoQ) vs. our estimate of 11.4%%. Consequently, RPAT/APAT came in at 3.9bn (+21.4%/+32.7% YoY/QoQ, in line with our estimate).

Business highlights: The Q4FY22 order inflow came in at INR 40.1bn (+25.3/- 19.6% YoY/QoQ), taking the FY22 OI to INR 194.2bn (+43.1% YoY). The OB, as of Sep-22, stood at INR 171.8bn (~1.2x FY22 revenue). During the year, the energy/smart infra/MO/DI OB grew by 22/30/136/53% YoY to INR 62.3/52.6/33.4/45.9bn. There was strong ordering across the business segments, particularly in the mobility segment.

FY23 outlook: FY23 will be a mixed year, with continued government and private Capex, increased customers' interest in energy efficiency and de-carbonization solutions albeit some global headwinds are likely on account of logistic challenges, global recession, and inflationary pressure. The year looks favourable for various businesses like solar, data centers, intra-logistics, etc.

Shares of Siemens Limited was last trading in BSE at Rs. 2947.70 as compared to the previous close of Rs. 2905.15. The total number of shares traded during the day was 16704 in over 1775 trades.

The stock hit an intraday high of Rs. 2956.00 and intraday low of 2886.50. The net turnover during the day was Rs. 48776604.00.

Source : Equity Bulls

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Siemens INE003A01024 ADD HDFCSecurities