Buy Siemens; target of Rs 907: Motilal Oswal

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Buy Siemens; target of Rs 907: Motilal Oswal

Motilal Oswal is bullish on Siemens and has recommended buy rating on the stock with a target of Rs 907 in its January 29, 2011 research report.

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Motilal Oswal is bullish on Siemens and has recommended buy rating on the stock with a target of Rs 907 in its January 29, 2011 research report.

"Siemens India, in 1QFY11 (year ending September) has reported revenue of Rs 24 billion (up 36% YoY) which was above our estimates of Rs 23 billion (up 23% YoY). 1QFY11 EBITDA margin dropped 497bp YoY to 14.4% against our estimate of 12% (down 730bp YoY). 1QFY11 margins were high as 1QFY10 contained a one-time income of Rs 760 million accrued due to the early completion of certain projects. Adjusted for it, EBITDA margin was 15.3%. Reported PAT was up 3% YoY at Rs 2.4 billion, above our estimates of Rs 1.8 billion (down 24% YoY). However, adjusting for one-time income, PAT grew 29% YoY."

"In 1QFY11, energy and industry revenue was Rs 14 billion (up 60% YoY) and Rs 12 billion (up 10% YoY) respectively. Revenue growth across segments was robust with revenue of power generation and oil and gas verticals doubling year-on-year within the energy segment. In the industry segment, building technology revenue jumped 62% YoY as Siemens began to reap benefits of higher traction after the merger of Siemens Building Technologies Ltd with itself. EBIT margins for industry improved 72bp YoY to 11% and the energy segment posted decline of 732bp YoY to 15%. Among the segments, power verticals of generation, transmission and distribution declined in EBIT margins, partly due to a high base effect in 1QFY10, and partly due to booking of project-related costs and LD provisions,"

"The order book at the end of 1QFY11 was Rs 151 billion (up 11% YoY and 11% QoQ). In 1QFY11, the company reported order intake of Rs 40 billion, which was down 24% YoY as it won a Rs 26 billion order from Qatar in 1QFY10. Order intake was up 32% QoQ. In 4QFY10, Siemens India, in consortium with Siemens AG, received an LoI for the development of a 1,200MW combined cycle power plant (CCPP) from Torrent Power, tentatively valued at Rs 20 billion-25 billion, which is included in the order intake figure. We estimate Siemens will post FY11 EPS of Rs 30.2 (up 23%) and FY12 EPS of Rs 39 (up 28%). It will post revenue and PAT CAGR of 25% and 27% respectively over FY11-13. At its CMP Siemens trades at 19x FY11E and 15x FY12E. Maintain Buy with a price target of Rs 907 (30x FY11E)," says Motilal Oswal research report.

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