Buy Schneider Electric Infrastructure; target of Rs 800: LKP Research

LKP Research's research report on Schneider Electric Infrastructure

Schneider Electric Infrastructure Ltd (SEIL) had a strong quarter, continuing its track record of consistent performance. The company exceeded expectations on all fronts, with revenues growing 15% YoY, driven by a better sales mix and growth in both Transactional and Services. Normalizing raw material costs and a stronger product mix helped improve gross margins by 260bps YoY, while overall margins increased by 150bps YoY to 16.4%. PAT grew 22% YoY, and after adjusting for an exceptional item (reversal of interest provisions), APAT was up slightly by 2% YoY. In Q3FY25, order growth slowed to 5.3%, a typical trend for the quarter, but total order inflow for 9MFY25 rose 14%, reflecting strong momentum across all segments. Management is optimistic, expecting order growth to pick up next quarter and build a strong backlog by FY25E. With a healthy deal pipeline and no major obstacles, the company is confident in its growth. SEIL is expanding its transformer manufacturing capacity at the Baroda plant from 5,500 MVA to 7,000 MVA with an investment of ₹136 mn, expected to be completed by FY 2025-26E. The company is also exploring opportunities in the nuclear energy sector, aiming to supply equipment and software for nuclear power plants, including small modular reactors.

Outlook

Given the strong performance in 9MFY25, we have adjusted our margin and earnings estimates and introduced FY27 projections. We are rolling forward our estimates to FY27E and maintain our BUY rating with a revised target price of ₹800.

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