Buy Siemens For A Price Target Of Rs. 2550: ICICI Direct

Q4FY21 results of Siemens:

The infrastructure company follows October-September financial year. For the Q4 period of Fy21, the company logged decent performance despite disruptions. Consolidated revenue came in at Rs. 4296.1 crore, up 21.1% YoY. EBITDA stood at Rs. 447.2 crore with margins of 10.4% impacted by higher other expense, higher commodity prices. Consequently, the company reported profit after tax (PAT) of Rs. 321.6 crore. Order inflows for the review period had been decent at approximately Rs. 3378 crore, up 4.9% on YoY.

About Siemens:

Siemens is a leading player in technology solutions with key focus on intelligent and smart infra for buildings and distributed energy systems, among others. The company operates primarily in 5 major segments that include energy/gas & power, smart infrastructure, digital industries, mobility. As per the brokerage house, Siemens is well positioned to benefit from the overall energy market transformation from electrification to automation & digitisation.

Target Price and Valuation:

The brokerage values Siemens at Rs. 2550 on an SoTP basis. “Overall, further penetration of automation & digitisation products and services across segments to drive long term growth”, adds the brokerage.

Key triggers for future price performance:

Strong focus on technology leadership in digitisation and automation products to further strengthen its market share.

Strong demand for short cycle products with clear traction form steel, cement, chemical, pharma, fertiliser industries to drive strong growth and margin expansion in smart infrastructure and digital industries segments.

We expect revenue, EBITDA to grow at CAGR of nearly 11%, 16.4%, respectively, in FY21-23E owing to strong traction in short cycle products and services .

Alternate Stock Idea:

“We also like Bharat Electronics in our coverage. Strong order inflows visibility, strategy to diversify into non-defence/civil areas, focus on increasing exports and services to drive long term growth”, said the brokerage. Buy with a target price of Rs. 250 suggests the brokerage house, resulting into gains of 26 percent if the investor buys into the scrip at the current market price of Rs. 198.2 per share.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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