Siemens Limited - An asset for long-term - Antique

2QFY13 financials for Siemens were below our estimates (adjusting for oneoffs) due to slowdown in economy and aggressive accounting by company of taking cost upfront for delayed projects. The profitability was impacted due to 1. Reduced Volume, 2. Pricing Pressure, 3. Delay in Off-take by Customers, 4. Increase in project cost, 5. Volatility in currency and commodity prices. However, the company has provided for likely cost escalation on the ongoing projects, most of which are delayed largely on account of client related issues and there can be positive surprise on FY14 margins. Stock currently trades at 20% discount to its historical valuations and will re-rate significantly with any recovery in capex cycle. We maintain HOLD.

Source : Equity Bulls

Keywords