PL Stock Report: Siemens (SIEM IN) - Q3SY23 Result Update - Strong quarterly performance - Accumulate

Siemens (SIEM IN) - Amit Anwani - Research Analyst, Prabhudas Lilladher Pvt Ltd

Rating: ACCUMULATE | CMP: Rs3,779 | TP: Rs4,241

Q3SY23 Result Update - Strong quarterly performance

Quick Pointers:

♦ Relatively lower operating expenses aid EBITDA margin expansion of 195bps.

♦ Order inflow came in at Rs52.9bn (up 5.9% YoY).

Siemens (SIEM) reported strong quarterly performance with consolidated revenue up ~14.4% YoY. EBITDA margin expanded 195bps YoY to 11.6%, owing to lower other expenses. We believe that strong traction is likely to continue in high growth verticals such as data centers, railways, chemicals & pharma, e-mobility, waste heat recovery, smart infra, intralogistics, building automation, decarbonization, T&D etc. Order inflows grew 5.9% YoY to Rs52.9bn, driven by base business (up 10.9% YoY) despite some impact on advance ordering in short cycle products.

We remain positive on SIEM from a long-term perspective given 1) its strong and diversified presence across industries through focus on electrification, digitization & automation products, 2) product localization, 3) strong balance sheet, 4) healthy public & private capex and 5) focus on cost efficiencies. The stock is currently trading at PE of 69.7x/63.4x/53.5x SY23/24/25E. We maintain Accumulate rating on stock with TP of Rs4,241 (Rs4018 earlier), valuing it at PE of 60x SY25E (57x earlier), factoring in strong outlook and focus on high growth areas such as digitalization, Automation & energy efficiency product offerings.

Growth across segment drive revenues: Consolidated revenue grew 14.4% YoY to Rs48.7bn (PLe ~Rs47.3bn), driven by growth across segment. On segmental front, Energy grew 4.4% YoY to Rs15.2bn, Smart Infrastructure grew 14.2% YoY to Rs17.2bn, Mobility grew 47.7% YoY to Rs5.8bn and Digital Industries grew 13.2% YoY to Rs11.3bn. EBITDA grew 37.5% YoY to Rs5.7bn, (PLe Rs5.4bn), with EBITDA margin expanding by 195bps YoY to 11.6% (PLe ~11.5%), mainly due to lower other expenses as % of sales (10.8% vs 12% in Q1FY23). PAT came in at ~Rs4.6bn up 50.7% YoY (PLe ~Rs4.1bn), aided by higher other income (up 68.2% YoY to Rs1.3bn).

Order inflows came in at Rs52.9bn: Q3FY23 order inflows grew 5.9% YoY to Rs52.9bn, owing to base business orders (up 10.9% YoY). Order book (calculated) stands at ~Rs200bn (1.1x TTM revenue). SIEM continues to witness traction from railways, and public/private capex on infrastructure, steel, cement, data centers, intralogistics and e-vehicles. Furthermore, customers’ focus on energy efficiency and digitalization measures to improve productivity, flexibility and quality, augurs well for SIEM’s business prospects.

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