Siemens - Motilal Oswal

SIEMENS: FY10 Annual Report highlights; Sharp improvement in margins; Strong cash-flow generation

During the year, the company reported a 27% growth in adjusted net profit, to Rs8.27b. Sales grew 11.2% and stood at Rs94b.

Siemens booked new orders worth Rs124b during the year, up 41% YoY, while order-book at year-end stood at Rs136b, up 32% YoY.

Strong cash-flow generation in FY10. Cash-balance grows to Rs18.5b from Rs14.5b in FY09. Receivables improve to 129 days of sales from 149 days in FY09.

Aggressive provisioning in past two years will help sustain margins going forward.

Management reemphasizes importance of India; maintains strong outlook for FY11.

Siemens is also a key partner in Siemens AG's global network, creating significant exports opportunity. We believe that the company will continue to be Siemens AG's growth vehicle in the Middle East and North African markets due to cost-advantages. The stock trades at 27x FY11E and 21x FY12E. Any large order from Qatar can result in a substantial upgrade in our earnings estimates. Maintain Buy with a price target of Rs907 (30xFY11E).

Source : Equity Bulls

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