Electronics and electrical engineering company Siemens shares fell 2 percent intraday Thursday in addition to 2 percent loss in previous session after dismal performance in Q4FY16. The stock has underperformed Sensex by around 13 percent over the last year. Brokerage houses retained their negative outlook, saying valuations are still rich and quarterly operational performance was weak.
"Siemens India is trading at FY17 (September 2017) PE and EV/EBITDA of 45x and 26x respectively which looks rich, on our forecast of 36 percent EPS growth in FY17," Deutsche Bank said which has retained sell rating with target price of Rs 1,050 on the stock.
While maintaining underweight rating with a target price of Rs 1,000, JP Morgan says it sees downside risk to earnings, taking a cue from the September quarter margin miss, unless the growth and margin outlook for FY17 improves.
"September quarter adjusted profit (excluding exceptional gain) of Rs 170 crore (flat YoY) was 9 percent below the estimate and more than 15 percent below consensus. The earnings miss was led by margin disappointment. September quarter order inflows were down 21 percent, partially reversing the strong momentum seen over 9MFY16. Overall FY16 adjusted PAT was down 2 percent YoY, to Rs 590 crore (6.5 percent below estimates). The stock is currently trading at 63x FY16 EPS," JP Morgan reasoned for its rating.
The company follows October-September as its financial year.
Fourth quarter profit including exceptional gain from the sale and transfer of the healthcare business to the parent company jumped more than 11-fold to Rs 2,467 crore YoY. EBITDA (earnings before interest, tax, depreciation and amortisation) slipped 14.2 percent year-on-year to Rs 241.9 crore and margin contracted by 70 basis points to 7.8 percent in Q4 due to higher other expenses.
Lower tax rates (24 percent) and higher interest income (up 72 percent YoY) offset weak operations. Revenue declined 6.3 percent year-on-year to Rs 3,091 crore during the quarter.
Earnings missed analysts' estimates on all counts. A CNBC-TV18 poll had estimated EBITDA at Rs 320 crore and margin at 10 percent for the quarter while revenue at Rs 3,236 crore.
Except digital factory and process industries & drives, PBIT margins also fell across business segments including power where competition is stringent.
Profit after exceptional gain in FY16 increased 145 percent to Rs 2,873.6 crore and revenue was up 2.6 percent at Rs 10,835.8 crore compared with FY15. Profit before exceptional items declined 1.7 percent to Rs 593.30 crore on yearly basis.
According to Deutsche Bank, upside risks to its estimates are 80 percent of float is tightly held; sharp uptick in industry; and exports recovery taking order/revenue growth beyond 20-25 percent.
At 10:31 hours IST, the stock was quoting at Rs 1,039.60, down Rs 15.50, or 1.47 percent on the BSE.Posted by Sunil Shankar Matkar