Siemens India Posts Highest Revenue In 26 Quarters

Siemens India Ltd. reported its best quarterly performance in over six financial years on higher revenue across all segments, led by building technologies, power and gas, and mobility.

The company's revenue in the July-September period stood at Rs 3,939 crore—the highest since the second quarter of the financial year 2011-12. Siemens India follows a October-September financial year. The fourth-quarter revenue is 14 percent higher than the consensus estimate of analysts tracked by Bloomberg. It's also the third straight quarter when the company beat the street's estimates.

Siemens India's top line was aided by incentives worth Rs 67 crore under the Merchandise Export from India Scheme.

Profit, however, fell 55 percent over the last year to Rs 279 crore due to an exceptional gain of Rs 560 crore in the base quarter on selling their land at Worli. Adjusted for the exceptional gain, profit grew 39 percent. The company's operating income grew 32 percent that led to a 600-basis-point jump in margin.

Siemens India's standalone Q4 highlights (Year-on-Year)

• Revenue rose 25 percent to Rs 3,939 crore from Rs 3,142 crore. That compares with Rs 3,448 crore estimated.
• Net profit fell to Rs 279 crore from Rs 624 crore. That compares with Rs 236 crore forecast.
• Earnings before interest, tax, depreciation and amortisation rose to Rs 419 crore from Rs 317 crore. That's against Rs 346 crore estimated.
• Margin stood at 10.6 percent compared with 10.1 percent a year ago and 10 percent forecast.

Deutsche Bank's analyst Abhishek Puri said Siemens India beat estimates on strong execution across all verticals. He recommended a “Buy” with a target price of Rs 1,130 apiece. So did Dhirendra Tiwari of Antique Stock Broking. He set a target of Rs 1,370, implying a 40 percent upside to Friday's closing price.

The operating margin expanded for each segment, Tiwari said, adding the company's orders are expected to improve as the private sector capital expenditure revives. The bigger upside, he said, is a recovery in growth and improvement in profitability, expected over the next two to three years.

The company's new orders increased 38 percent to Rs 3,720 crore that provides a good growth visibility in the ongoing financial year, according to Sunil Mathur, managing director and chief executive officer of Siemens India. He said the order inflow in the base business continues to grow, and profitability and cash from operations are strong.

Deutsche Bank said margin growth was strong for railways, industry and digital factory divisions, and is coming on a par with the parent. “While gross margin contracted 50 basis point on higher raw material prices and project business, Ebitda improved 50 basis points due to operating leverage benefits,” Puri said.

Of the 20 analysts covering the stock, six recommend a “Buy” and an equal number suggest a “Hold”, while the rest have a “Sell” rating. The Bloomberg consensus target price implies a potential upside of 9.6 percent over Friday's closing price.

Siemens India trades at a price-to-earnings multiple of 35 to its one-year forward estimates. That compares with a two-year average price-to-earning ratio of 44 times. The stock trades 20 percent lower on a year-to-date basis.