Buy Siemens India Ltd - Motilal Oswal

Siemens (SIEM IN; Mkt Cap USD6.2b, CMP Rs848, Buy)

The right steps

Siemens India has strong capabilities in three core sectors of the economy: Infrastructure, Industry and Consumer (Healthcare, Water).

The company has shown stability in earnings growth, with standalone sales and profit growing at a CAGR of 30% and 34%, respectively over FY03-10.

Siemens India is emerging as a key partner in Siemens AG's global growth strategy. India will also be a key sourcing destination for value-priced products.

During the past three years, Siemens has invested Rs7.7b and plans to invest Rs16b over the next 3-4 years.

Siemens AG has made an offer to the shareholders of its Indian subsidiary to acquire up to 19.82% of its share capital at a price of Rs930 per equity share.

We believe that Siemens offers a unique exposure to Indian Industry, Power, Transport and Healthcare sectors, and will continue to command a significant premium to the broad market. We are revising our earnings estimates upwards by 4% for FY11 and by 3% for FY12. We maintain Buy, with a revised price target of Rs954, based on 24x FY12E EPS (implying 21% return assuming 45% acceptance in the open offer).

Source : Equity Bulls

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