4 reasons why JP Morgan downgraded Siemens to underweight
At43 times one-year forward P/E and 8 percent FY13(estimated) RoE, JP Morgan thinks Siemens India shares are expensive.
Moneycontrol Bureau
Brokerage house JP Morgan has downgraded its rating on Siemens India to 'underweight' from neutral after the company's weak March quarter numbers, and cut target price of the stock to Rs 450 from Rs 605 earlier.Also read: Slow capex, higher project cost dented Siemens Q2 nosHere are four reasons for JP Morgan downgrading the stock.* Revenue declined by 16% in 1H (September 2012 to March 2013), well below
expectations due to customer delays attributed to unavailability of land or financing. * At the analyst meet, management stated that even the short cycle business (where growth had been resilient) witnessed deferrals by customers in a persistent high interest-rate environment. * Order backlog declined 12% YoY and even Rs 2800 crore of inflows in the March quarter (up 52% on a low base) were not sufficient to stem the decline.* Low capacity utilization in factories contributed to sharp margin compression across segments. Post estimate cuts, at 43 times one-year forward P/E and 8 percent FY13(estimated) RoE, we think the stock is expensive. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
