Siemens Limited - An asset for long-term - 3QFY13 Results Review - ANTIQUE

Siemens quarterly results continue to be impacted due to industrial slowdown, project delays and aggressive write-offs by the company. The company reported revenue decline of 12.5% during the quarter, and a loss due to a hit of INR1.35bn on account of provisioning for revised revenue and cost estimates on several delayed projects. Adjusting for the write-off, EBITDA margin improved 60bps on YoY and 240bps on QoQ basis to 4.9% during the quarter. Siemens is likely to end FY13 on a significantly bad note, while preparing ground for improved performance in FY14. Stock currently trades at discount to its historical valuations and will re-rate significantly with any recovery in capex cycle. We maintain HOLD.

Valuation and outlook

We have revised our revenue downwards by 2.6% to INR115.1bn in FY13 and by 2.6% to INR125.9bn in FY14. We have cut earnings by 6.2% to INR8 in FY13 and by 8.2% to INR13.4 in FY14. At CMP of INR450, stock is trading at 60xFY13e and 33.6xFY14e. Historically, the stock has traded in the PE range of 35-43x (past 5-year). We believe current depressed earnings would not be true reflection of company's potential given its technology and product strength, which one needs to assess long-term earnings profile of the company. Stock has seen steep correction in recent times and can see further down side if environment does not stabilize. We maintain HOLD with target price of INR402 (30xFY14).

Source : Equity Bulls

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