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Research
Siemens - 4QFY12 Results Update - Motilal Oswal
Posted On : 2012-11-27 20:22:45( TIMEZONE : IST )
- 4QFY12 Operating performance below estimates: 4QFY12 results were significantly below estimates. Revenues declined 5% YoY (v/s our est of 1% YoY decline) despite being positively impacted by amalgamation of VAI Metals during the quarter, excluding which sales declined by ~10% YoY. EBITDA margin contracted to a mere 3% because of cost overruns in certain projects resulting from delay in offtake by customers and negative operating leverage. Adj PAT at INR409m, down 77%, was below our estimates of INR1.6b. Wind factory in Vadodara has been impaired, including which the quarter had net loss of INR557m.
- Order intake at INR28b grew by a mere 6% YoY: During the quarter order intake grew by only 6% YoY culminating into a decline of 17% YoY during FY12. Intake is impacted by steep fall in order inflow across segments mitigating the positive impact of a large order received from NMDC during the year.
- Cautious Outlook; Management prefering project cash flows over revenues: Management mentioned that the environment continues to remain tough impacted by high cost of capital and uncertain economic situation leading to delay in project execution and delay in product offtake by customers. The company also mentioned about a re-look at its capex plans in the near term although it remains committed about its investment in the SMART products. In this volatile environment "the focus is more on fiscal discipline than on topline".
- Capital employed tightly controlled: Capital employed increased just INR1.4b during FY12 (INR39.6b v/s INR38.1b at FY11 and INR42b at 2QFY12) indicating strict preference for project cash flows over revenues.
- Cutting earnings estimate by 25%; maintain Neutral: We have cut our earnings estimate by 25% for FY13 to factor in deterioration in revenues and profitability. We expect a recovery in FY14 on the back of revival of industrial capex leading to improved environment for short cycle industrial products and Healthcare segment. The stock quotes at P/E of 38.5x FY13E and 29.4x FY14E. Neutral with TP of INR589 (26x FY14E, Sept. ending).
