Religare's research report on SiemensThe board of SIEM has approved the sale of its healthcare business to Siemens Healthcare, a subsidiary of Siemens AG, for a consideration of Rs 30.5bn (or ~2x FY16 sales), and distribute 50% of the net consideration as special dividend. As per management, the sale is in line with Siemens AG’s global strategy of managing the healthcare business under a separate entity. We build the transaction into our estimates while maintaining SELL on the stock due to its expensive valuations.We expect the deal to close in FY16 and build the transaction (including special dividend for FY16) into our estimates. We believe current valuations (at PE of 65x Mar 17) are expensive given the company’s muted growth and returns profile, even as cash flows remain strong. We also expect the high import content in product lines to cap margins. Maintain SELL with a Mar’17 TP of Rs 750.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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