21 November 2019
4QFY19 Results Update | Sector: Capital Goods
Siemens
Buy
BSE SENSEX
40,575
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
11,968
SIEM IN
Order inflow disappoints; focus on profitable growth
356
Earnings underperformance attributed to margin miss:
Revenue grew 4.8%
549.7 / 7.7
to INR41.3b (in-line) in 4QFY19 (year ending September). EBITDA margin
1717 / 902
shrank 80bp YoY to 9.8% (our estimate: 11.0%). Thus, EBITDA declined 3.1%
-12/24/53
740
YoY to INR4.1b (13% miss). Adjusted for one-off income of INR473m toward
25.0
monetization of property, PBT was flat YoY at INR4.3b. Due to re-
CMP: INR1,544
TP: INR1,792(+16%)
Financials & Valuations (INR b)
2019 2020E
Y/E Sep
136.8
150.4
Net Sales
14.8
17.5
EBITDA
10.9
14.5
PAT
30.5
40.6
EPS (INR)
21.6
33.0
Gr. (%)
254.0
284.9
BV/Sh (INR)
12.0
14.3
RoE (%)
12.4
14.7
RoCE (%)
50.5
38.0
P/E (x)
6.1
5.4
P/BV (x)
2021E
169.1
20.2
16.8
47.2
16.1
320.7
14.7
15.1
32.7
4.8
Estimate change
TP change
Rating change
measurement of DTA, the effective tax rate was at 32.2%. Adj. PAT was up
5.7% YoY to INR2.9b.
For FY19, revenue/EBITDA/adj. PAT grew 7.5%/17.9%/26.1%. Operating cash
flow was strong at INR12.3b v/s INR422m last year, led by an improvement
in working capital. Net working capital as a percentage of sales improved to
69.6 days from 83.9 days in FY18.
Segmental performance:
(a) Gas & Power revenue grew 11.9% YoY to
INR16.3b; PBIT margin expanded 40bp YoY to 10.8%. (b) Smart
Infrastructure revenue was down 9.2% YoY to INR11b; PBIT margin was at
9.3% (+230bp YoY). (c) Mobility revenue was flattish at INR3.6b; PBIT margin
shrank 510bp YoY to 10.5%. (d) Digital Industries revenue grew at a paltry
3.8% to INR7.2b; PBIT margin expanded 140bp YoY to 7.8%. (e) Portfolio of
Companies revenue grew 17.6% YoY to INR3.9b, but PBIT margin was at -
6.2% v/s +6.3% last year due to one-off employee expense (led by VRS and
inventory led provision).
Lower order inflow, stable book-to-bill ratio:
Order inflow declined 14.3%
YoY to INR31.9b in 4QFY19. SIEM let go some large orders which would have
affected profitability. For FY19, order book was down 3.8% YoY at INR119b.
However, book to bill stood at ~1x, which management believes is stable to
drive growth (peak book to bill was 1.2x).
Maintain BUY:
Our EPS estimate increase by 17%/19% in FY20/FY21 mainly
on account of lower tax rates. We roll forward our estimates to Sep’21E and
value SIEM at 38x Sep’21E EPS to arrive at a TP of INR1,792/share (prior:
INR1,290).
MOSLe
4QE
42,369
7.6
4,657
11.3
11.0
515
52
822
0
4,912
838
17.1
4,074
4,074
45.9
(INR m)
Var %
-2.6%
-12.9%
Quarterly Performance
Y/E September
Total Revenues
Change (%)
EBITDA
Change (%)
As % of Revenues
Depreciation
Interest
Other Income
Extra-ordinary Items
PBT
Tax
Effective Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
1Q
24,295
5.9
2,724
16.6
11.2
470
17
705
0
2,942
1,037
35.2
1,905
1,905
18.6
FY18
FY19
2Q
3Q
4Q
1Q
2Q
3Q
4Q
32,834 30,730 39,392 28,071 35,496 31,984 41,288
12.1
15.9
25.4
15.5
8.1
4.1
4.8
3,228 3,023 4,186 3,661 4,257 3,537 4,056
15.9
33.4
32.0
34.4
31.9
17.0
-3.1
9.8
9.8
10.6
13.0
12.0
11.1
9.8
490
500
507
532
571
512
558
11
4
51
2
24
2
86
639
692
764
877
830
825
941
0
0
0
-596
-157
0
354
3,366 3,211 4,392 3,408 4,335 3,848 4,707
1,169 1,167 1,600 1,128 1,532 1,367 1,401
34.7
36.3
36.4
33.1
35.3
35.5
29.8
2,197 2,044 2,792 2,280 2,803 2,481 3,306
2,197 2,044 2,792 2,876 2,960 2,481 2,952
22.6
25.5
39.1
51.0
34.7
21.4
5.7
FY18
FY19
1,27,251 1,36,839
17.7
7.5
13,161
15,511
25.2
17.9
10.3
11.3
1,967
2,173
82
114
2,800
3,473
0
-399
13,912
16,697
4,973
5,428
35.7
32.5
8,939
10,870
8,939
11,269
27.1
26.1
-4.2%
-18.9%
-27.5%
Nilesh Bhaiya – Research Analyst
(Nilesh.Bhaiya@MotilalOswal.com); +91 22 6129 1556
Pratik Singh – Research Analyst
(Pratik.Singh@MotilalOswal.com); +91 22 6129 1543
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.