Siemens India's chequered performance track record
Siemens India derives 80% of its revenues from projects and a smaller proportion from products.
By ET Bureau |
RESEARCH: JP MORGAN
RATING: NA
CMP: RS 469
Siemens India derives 80% of its revenues from projects and a smaller proportion from products. Around 15% of the company���s revenues are generated from power generation, 25% from power T&D , 10.5% from industrial solutions and products, 12.5% from IT, 4% from transportation, and the rest from diverse segments including medical systems.
Its order book of Rs 9,500 crore provides 1.2 years��� visibility, but the book has remained stagnant over the past five quarters, mainly due to the execution of the large Qatar T&D project, which once constituted 40% of the company���s order book.
Siemens��� recent performance track record has been chequered, mainly due to fixed price contracts and cost overruns on the Torrent and MUTP projects. The basic concerns remain the company���s sustainability of revenue growth, penchant to disappoint on margins of large projects, and predominance of IT and large overseas project exposing the company to a slowdown in spending.
A key upside risk is that JP Morgan���s target price is significantly below consensus and below the management���s guidance to double revenue in three years.
RATING: NA
CMP: RS 469
Siemens India derives 80% of its revenues from projects and a smaller proportion from products. Around 15% of the company���s revenues are generated from power generation, 25% from power T&D , 10.5% from industrial solutions and products, 12.5% from IT, 4% from transportation, and the rest from diverse segments including medical systems.
Its order book of Rs 9,500 crore provides 1.2 years��� visibility, but the book has remained stagnant over the past five quarters, mainly due to the execution of the large Qatar T&D project, which once constituted 40% of the company���s order book.
Siemens��� recent performance track record has been chequered, mainly due to fixed price contracts and cost overruns on the Torrent and MUTP projects. The basic concerns remain the company���s sustainability of revenue growth, penchant to disappoint on margins of large projects, and predominance of IT and large overseas project exposing the company to a slowdown in spending.
ADVERTISEMENT
A key upside risk is that JP Morgan���s target price is significantly below consensus and below the management���s guidance to double revenue in three years.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
