Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SIEMENS INDIA LTD
PRICE: RS.721 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.740 FY12E P/E: 24.7X
q Siemens reported moderate order inflows in FY11 due to sluggish investment
climate in the domestic market. However, company maintains sanguine
long term outlook on Indian infrastructure space.
q Revenues grew by 28% in FY11 aided by Energy segment; EBITDA margins
contracted on account of increase in input prices and incurred forex
losses.
q Company maintained its leadership position in energy segment despite
increasing competition in the industry; Industry segment reported meaningful
growth in order intake on back of its healthy mix of short-cycle
product business.
q We tweak our earnings estimate for FY12 as growth in Power T&D sector
remains remained elusive. We believe that the sector has been negatively
affected by increasing interest rate trend and delays in the commissioning
of power projects.
q In view of inadequate upside due to rich valuations, we maintain Accumulate
with a DCF based revised price target of Rs 740 (Rs 780 earlier).
Order book growth remained muted in FY11 due to sluggish economic
activity; industry and healthcare segment reported meaningful
traction
n Company reported closing order book at Rs 139 bn down 7% YoY at the end of
FY11 implying twelve month business visibility. Order intake in FY11 remained
flat at Rs 123 bn vis-à-vis Rs 124 bn in FY10.
n Management has highlighted that currently capex outlook in private sector looks
subdued. However, company maintains its sanguine long term outlook on all the
segments including energy and healthcare division.
n In FY11, Industry segment reported order intake growth of 35% YoY at Rs 52.9
bn translating into the sales of Rs 46 bn. Energy segment reported 24% YoY degrowth
in new order intake at Rs 58.2 bn and healthcare division observed 44%
YoY growth in order intake at Rs 11.2 bn.
n We believe that the company is reasonably poised to benefit from any recovery
in the overall infrastructure spending by the public and private sector. While the
healthcare division is likely to report resilient demand, growth in energy and industry
division would be sensitive to the economic revival.
n We believe that the company is likely to report traction in drive technologies and
building technologies going ahead. We also believe that it would report reasonable
growth in healthcare division in future. In our projections, we therefore build
order intake of Rs 14 bn for FY12E.
Revenues grew by 28% in FY11 aided by Energy segment;
EBITDA margins contracted on account of increase in input prices
and incurred forex losses
n Siemens reported 28% YoY growth in revenues at Rs 121bn in FY11 mainly
driven by industry automation, building technologies, power and healthcare division.
n EBITDA margin fell by 260 bps to 11.1% in FY11 leading to a PAT of Rs 8.4 bn
vis-à-vis Rs 8.2 bn in FY10.
n The margin contraction was primarily due to increase in input prices and high
forex loss of Rs.1.6 bn in Q4FY11 probably on the derivative exposure taken to
hedge international sales receivables.
Energy division; company maintained its leadership position despite
tough competition and has bagged significant orders
n In FY11, order intake for the energy division lowered by 24% YoY at Rs 58.2 bn.
Revenues for the segment grew by 41% YoY at Rs 65 bn. However it reported
EBIT margin of 10.8% vis-à-vis 14% in FY10 for the segment.
n In the year under review, company has received a contract from Torrent power
to install 1100 MW combined cycle power plant. Company has also rolled out
its 100th gas insulated switchgear (GIS) substation from its manufacturing unit at
Aurangabad.
n Management remains positive on the long term outlook for the division. It expects
that the solution to the current issues related to fuel linkages and environment
clearances would maintain the growth of the sector in future.
Industry Sector reported meaningful growth in order intake on
back of its healthy mix of short-cycle product business
n Industry division reported a growth of 35% YoY in order intake at Rs 52.9 bn in
FY11. Revenues for the segment grew by 11% YoY at Rs 53.2 bn. EBIT margin
remained flat at 7.04% for the segment.
n Company has been observing continued momentum in Building Technologies
(BT), Drive Technologies (DT) and industry Automation (IA) business. Another
factor that contributed to the segment's performance is the additional solutions
in its portfolio due to the amalgamation of the Company's Chennai-based subsidiaries
Siemens Pvt. Ltd.
n Management shares a sanguine outlook for Indian drive technologies business.
The DT division has been observing meaningful demand for its energy efficient
and sustainable products due to increased compliance toward energy conservation.
n Demand for the segment has slightly moderated in Q4FY11. Management expects
that the segment is likely to benefit from any recovery in public spending
on infrastructure and urban development programs. However it expects margins
on remain subdued over FY12 due to increased labour cost and input prices.
Healthcare Market continues to grow at a healthy pace in FY11
despite challenging macros; company eyes long term positive
outlook for the sector
n Healthcare division reported a growth of 44% YoY in order intake at Rs 11.2 bn
in FY11 on back of 1) continued momentum in investment in healthcare industry
due to rapid urbanization and increase in health insurance premium and 2) lower
base of FY10. Revenues for the segment grew by 39% YoY at Rs 605 mn.
n Company remains positive on the segment and believes that it is likely to gain
impetus from the new technologies planned to be launched in FY12. Company
intends to increase its offerings in tier ii and tier iii cities.
Working Capital deteriorated due to reduction in current liabilities
in FY11
n Net working capital deteriorated to 29 days of sales in FY11 from 5 days of sales
in FY10 due to decline in current liabilities to 138 days at the end of FY11 vis-àvis
173 days in FY10.
n Company reported Non-cash Working capital at Rs 9.3 bn in Fy11 vis-à-vis Rs 1.4
bn last year. We believe that the company has been finding it difficult to get
credit from its vendors due to ongoing liquidity crisis in the system.
Company reported subdued operating cash flow generation due
to increase in working capital requirement
n Company generated operating cash flow of Rs2 bn in FY11 vis-à-vis Rs 9 bn in
FY10 due to increase in working capital.
n It reported an increase of Rs 6.4 bn in gross block due to ongoing consolidation
of its subsidiaries. In FY11, it amalgamated Siemens Healthcare Diagnostics and
Siemens VAI metals Kolkata to name a few.
n Company reported net cash amounting to nearly Rs 1.3 bn at the end of FY11.
Siemens AG increased its stake in Siemens India in FY11
n Siemens AG has increased its stake to 75% from 55% earlier in Siemens India
by an investment of nearly EUR 1 bn.
n Management claims that the move is governed by parent's optimistic outlook on
Indian market transmission and infrastructure market.
n However, we believe that this could also reflect lack of investment opportunities
for MNC companies in the domestic market. We opine that typically during high
growth phase organizations tend to raise capital to fund their future growth.
Business Outlook: Domestic market is expected to remain subdues
in 1HFY12E; company likely to observe margin pressure
over FY12
n In our projected financials, we build growth at 23% CAGR between FY10-12E
driven by industrial, energy and healthcare division.
n We believe that the company would continue to experience increase in competitions
in power space mainly from domestic players mainly in T&D space.
n We believe that the company would also experience margin pressure on account
of increase in input prices. We opine that that margin would stabilize at current
levels of 11-11.5% going ahead.
Valuation & Recommendation
n We remain cautious on the stock and the MNC Electrical Equipment sector due
to ongoing competitive scenario coupled with stock valuations running ahead of
earnings growth.
n Currently Siemens stock is trading at 24.7x P/E and 14x EV/EBITDA on FY12 estimated
earnings.
n We prefer Siemens over the other MNC peers on account of higher order backlog,
robust cash flow and relative valuation discount. However, in view of rich
valuations implied by current market price, we maintain ACCUMULATE with a
DCF based price target of Rs 740 (Rs 780 earlier) on company's stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SIEMENS INDIA LTD
PRICE: RS.721 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.740 FY12E P/E: 24.7X
q Siemens reported moderate order inflows in FY11 due to sluggish investment
climate in the domestic market. However, company maintains sanguine
long term outlook on Indian infrastructure space.
q Revenues grew by 28% in FY11 aided by Energy segment; EBITDA margins
contracted on account of increase in input prices and incurred forex
losses.
q Company maintained its leadership position in energy segment despite
increasing competition in the industry; Industry segment reported meaningful
growth in order intake on back of its healthy mix of short-cycle
product business.
q We tweak our earnings estimate for FY12 as growth in Power T&D sector
remains remained elusive. We believe that the sector has been negatively
affected by increasing interest rate trend and delays in the commissioning
of power projects.
q In view of inadequate upside due to rich valuations, we maintain Accumulate
with a DCF based revised price target of Rs 740 (Rs 780 earlier).
Order book growth remained muted in FY11 due to sluggish economic
activity; industry and healthcare segment reported meaningful
traction
n Company reported closing order book at Rs 139 bn down 7% YoY at the end of
FY11 implying twelve month business visibility. Order intake in FY11 remained
flat at Rs 123 bn vis-à-vis Rs 124 bn in FY10.
n Management has highlighted that currently capex outlook in private sector looks
subdued. However, company maintains its sanguine long term outlook on all the
segments including energy and healthcare division.
n In FY11, Industry segment reported order intake growth of 35% YoY at Rs 52.9
bn translating into the sales of Rs 46 bn. Energy segment reported 24% YoY degrowth
in new order intake at Rs 58.2 bn and healthcare division observed 44%
YoY growth in order intake at Rs 11.2 bn.
n We believe that the company is reasonably poised to benefit from any recovery
in the overall infrastructure spending by the public and private sector. While the
healthcare division is likely to report resilient demand, growth in energy and industry
division would be sensitive to the economic revival.
n We believe that the company is likely to report traction in drive technologies and
building technologies going ahead. We also believe that it would report reasonable
growth in healthcare division in future. In our projections, we therefore build
order intake of Rs 14 bn for FY12E.
Revenues grew by 28% in FY11 aided by Energy segment;
EBITDA margins contracted on account of increase in input prices
and incurred forex losses
n Siemens reported 28% YoY growth in revenues at Rs 121bn in FY11 mainly
driven by industry automation, building technologies, power and healthcare division.
n EBITDA margin fell by 260 bps to 11.1% in FY11 leading to a PAT of Rs 8.4 bn
vis-à-vis Rs 8.2 bn in FY10.
n The margin contraction was primarily due to increase in input prices and high
forex loss of Rs.1.6 bn in Q4FY11 probably on the derivative exposure taken to
hedge international sales receivables.
Energy division; company maintained its leadership position despite
tough competition and has bagged significant orders
n In FY11, order intake for the energy division lowered by 24% YoY at Rs 58.2 bn.
Revenues for the segment grew by 41% YoY at Rs 65 bn. However it reported
EBIT margin of 10.8% vis-à-vis 14% in FY10 for the segment.
n In the year under review, company has received a contract from Torrent power
to install 1100 MW combined cycle power plant. Company has also rolled out
its 100th gas insulated switchgear (GIS) substation from its manufacturing unit at
Aurangabad.
n Management remains positive on the long term outlook for the division. It expects
that the solution to the current issues related to fuel linkages and environment
clearances would maintain the growth of the sector in future.
Industry Sector reported meaningful growth in order intake on
back of its healthy mix of short-cycle product business
n Industry division reported a growth of 35% YoY in order intake at Rs 52.9 bn in
FY11. Revenues for the segment grew by 11% YoY at Rs 53.2 bn. EBIT margin
remained flat at 7.04% for the segment.
n Company has been observing continued momentum in Building Technologies
(BT), Drive Technologies (DT) and industry Automation (IA) business. Another
factor that contributed to the segment's performance is the additional solutions
in its portfolio due to the amalgamation of the Company's Chennai-based subsidiaries
Siemens Pvt. Ltd.
n Management shares a sanguine outlook for Indian drive technologies business.
The DT division has been observing meaningful demand for its energy efficient
and sustainable products due to increased compliance toward energy conservation.
n Demand for the segment has slightly moderated in Q4FY11. Management expects
that the segment is likely to benefit from any recovery in public spending
on infrastructure and urban development programs. However it expects margins
on remain subdued over FY12 due to increased labour cost and input prices.
Healthcare Market continues to grow at a healthy pace in FY11
despite challenging macros; company eyes long term positive
outlook for the sector
n Healthcare division reported a growth of 44% YoY in order intake at Rs 11.2 bn
in FY11 on back of 1) continued momentum in investment in healthcare industry
due to rapid urbanization and increase in health insurance premium and 2) lower
base of FY10. Revenues for the segment grew by 39% YoY at Rs 605 mn.
n Company remains positive on the segment and believes that it is likely to gain
impetus from the new technologies planned to be launched in FY12. Company
intends to increase its offerings in tier ii and tier iii cities.
Working Capital deteriorated due to reduction in current liabilities
in FY11
n Net working capital deteriorated to 29 days of sales in FY11 from 5 days of sales
in FY10 due to decline in current liabilities to 138 days at the end of FY11 vis-àvis
173 days in FY10.
n Company reported Non-cash Working capital at Rs 9.3 bn in Fy11 vis-à-vis Rs 1.4
bn last year. We believe that the company has been finding it difficult to get
credit from its vendors due to ongoing liquidity crisis in the system.
Company reported subdued operating cash flow generation due
to increase in working capital requirement
n Company generated operating cash flow of Rs2 bn in FY11 vis-à-vis Rs 9 bn in
FY10 due to increase in working capital.
n It reported an increase of Rs 6.4 bn in gross block due to ongoing consolidation
of its subsidiaries. In FY11, it amalgamated Siemens Healthcare Diagnostics and
Siemens VAI metals Kolkata to name a few.
n Company reported net cash amounting to nearly Rs 1.3 bn at the end of FY11.
Siemens AG increased its stake in Siemens India in FY11
n Siemens AG has increased its stake to 75% from 55% earlier in Siemens India
by an investment of nearly EUR 1 bn.
n Management claims that the move is governed by parent's optimistic outlook on
Indian market transmission and infrastructure market.
n However, we believe that this could also reflect lack of investment opportunities
for MNC companies in the domestic market. We opine that typically during high
growth phase organizations tend to raise capital to fund their future growth.
Business Outlook: Domestic market is expected to remain subdues
in 1HFY12E; company likely to observe margin pressure
over FY12
n In our projected financials, we build growth at 23% CAGR between FY10-12E
driven by industrial, energy and healthcare division.
n We believe that the company would continue to experience increase in competitions
in power space mainly from domestic players mainly in T&D space.
n We believe that the company would also experience margin pressure on account
of increase in input prices. We opine that that margin would stabilize at current
levels of 11-11.5% going ahead.
Valuation & Recommendation
n We remain cautious on the stock and the MNC Electrical Equipment sector due
to ongoing competitive scenario coupled with stock valuations running ahead of
earnings growth.
n Currently Siemens stock is trading at 24.7x P/E and 14x EV/EBITDA on FY12 estimated
earnings.
n We prefer Siemens over the other MNC peers on account of higher order backlog,
robust cash flow and relative valuation discount. However, in view of rich
valuations implied by current market price, we maintain ACCUMULATE with a
DCF based price target of Rs 740 (Rs 780 earlier) on company's stock.
No comments:
Post a Comment