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Motilal Oswal Report
Siemens Ltd.'s Q2 FY24 result was ahead of our estimates, aided by a strong margin performance and higher other income leading to a sharp beat on profit after tax.
The company reported revenue/profit after tax growth of 18%/70% YoY in Q2 FY24. Margin outperformance was driven by an improved revenue mix, pricing gains and productivity measures taken by the company. Siemens aims to maintain margins at higher levels amid a strong demand scenario, along with productivity measures.
Order inflows stood at Rs 51.8 billion, down 13% QoQ, due to delays in finalization. However, the enquiry pipeline remains strong. Siemens continues to benefit from a strong demand environment, especially in transmission, data center, electric vehicle, railways, semiconductor, electronics and hydrogen.
It has planned a capex of Rs 5 billlion for GIS and metros to capitalize on domestic and export demand. Siemens has also approved the demerger of its energy segment into a separate entity, which will be listed by CY25-end.
We raise our estimates for FY24/FY25/FY26 by 17%/18%/26% primarily to factor in higher margin. We reiterate our Buy rating with a revised target price of Rs 7,800 (from Rs 6,050), based on 65 times Sep-26E earnings per share.
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