The company’s order inflow for FY13 totalled Rs 10,960 crore, up 7% y-o-y. The new orders were led by products and services, which grew by 15% y-o-y, but project orders remained weak and declined by 8% y-o-y. All its segments showed order-inflow growth except industry, where Siemens had booked a large order from NMDC last year, which brought about a higher comparison base effect.
Key new orders won by its segments were as follows. 1) The energy segment secured a R100-crore order from a Bangladesh steel re-rolling mill. 2) The industry segment won a R270-crore order from Rashtriya Ispat Nigam to modernize the blast furnace at its Visakhapatnam steel plant. 3) The infrastructure & cities segment won a R180-crore order for the electrification of the Delhi Mass Rapid Transit System. 4) The healthcare segment won a R47-crore order from Sir H N Hospital in Mumbai.
We downgrade rating on Siemens to ‘sell’ post the 36% run-up in its share price over the past three months. The stock is trading at expensive PERs of 44x for FY14E and 33x for FY15E, and we continue to see limited growth in the energy segment’s total order inflow. Also, the weak capex cycle should continue to affect adversely its industrial orders and put greater pressure on the energy segment’s margins due to high competition in the transmission and distribution (T&D) business.
Our six-month target price remains at Rs 420, based on an unchanged PER of 25x (in line with our target multiple for ABB), but now applied to our EPS for 4Q FY14E-3Q FY15E (formerly FY14E).