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Siemens Ltd – Decent quarter, valuation limits upside

ICICIdirect Research 29 Nov 2024 DISCLAIMER

Siemens reported decent set of Q4FY24 results. Consolidated revenues grew by 11% YoY to Rs. 6461 crore. Segmentally, Energy (34%of consolidated revenue share), Smart Infrastructure (30%), Digital Industries (17%) and Mobility (14%) segment revenues grew by 12.4%, 7.6%, 11% and 24% respectively on a YoY basis.

Order inflows for the quarter grew 37% YoY to ₹6164 crore. For FY24, the company bagged orders to the tune ₹ 23564 crore, up 14% YoY on a like to like basis (excluding exceptional order last year of Rs. 20,000 crore for 9000 HP electric locomotive in FY23). The order backlog at year end stood at ~₹ 47,724.4 crore (calculated order backlog) which provides good medium term revenue visibility.

EBITDA margins expanded 260 bps YoY on account of better operational performance to 13.3%. Consequently, on account of margin expansion and other income, PAT grew 45% YoY to Rs 831.2 crore. The company earned a one-time other income of ₹69 crore from sale of properties.
The company had announced capacity expansion from 15000 MVA to 30000 MVA at an investment of ₹360 crore in November 2023. This was scheduled to complete by December 2025 and is on track. Additionally, the company has also approved an investment of ₹100 crore (funded through internal accruals) in power transmission for expanding product portfolio to include large reactors. This will cater to increase in grid technology products. This product portfolio will cater to various international markets. 

Given the strong capex cycle in the industrial sector especially power T&D, factory automation and digitisation , data center puts Siemens in a very sweet spot and provides strong visibility into be medium term. Given rich valuations the stock might consolidate in a range and any severe correction might be used an entry point

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