shares of telecommunication equipments companies siemens

Siemens Ltd (updated - 04 May 2010)
Siemens disappointed the Street’s expectations on the top-line front, as revenues declined 7per cent year-on-year (y-o-y) to Rs 2,225.6 crore in the March quarter, against the expectation of Rs 2,500 crore. Operating profit stood at Rs 286 crore (down 18 per cent) and net profit was Rs 181 crore (down 19 per cent). The fall was due to a 900-basis-point drop in the cost of raw materials as a percentage to sales, while other costs such as depreciation and taxes remained stable. Growth in order intake and backlog continued to remain strong at 23 per cent and 39 per cent, respectively.

The overall performance was affected by a decline in the energy business that recorded good numbers in the December 2009 quarter. While sales declined 29 per cent, profit before interest and tax (PBIT) dropped 36 per cent due to a poor performance by the power transmission and distribution division.

In the industrial business, the company reported 25 per cent and 46 per cent growth in sales and PBIT, respectively, helped by automation and drive technologies.

Going ahead, analysts are hopeful about strong growth helped by mega-orders from Qatar (Rs 3,100 crore in H1FY10) and the Power Grid Corporation. Revival in the industrial growth should boost the order intake and backlog. However, Siemens may take time to report an improved performance, as pricing pressure (on account of competition and rising input costs) will keep margins under strain.

The stock ended 1.8 per cent lower over its previous close at Rs 695.20 on Monday and trades at 35x and 30x FY10E and FY11E earnings, respectively, which is higher than its five-year average PE multiple of 25x. Though analysts have upgraded FY10 and FY11 earnings forecasts, they still feel that the valuation is way over the comfortable zone.
source - business standard

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Siemens Ltd (updated - 26 Nov 2010)
Siemens sprung back to robust growth in financial year ended September 2010, after distressing for two financial years, thanks to better-thanexpected performance by all three business segments —industry, energy and healthcare.

Standalone revenues rose 11 per cent to `9,400 crore largely helped by short-cycle orders-led industry business, which saw the revenues grow 10.3 per cent to `4,844 crore (47 per cent of total revenues), while healthcare revenues recorded an impressive growth of 39 per cent to `754 crore. Energy business’ sales at `4,707 crore rose at a lower rate of 8.4 per cent as orders are of high gestation period and competition is stronger compared to other businesses.

Operating profit margin (OPM) improved 166 basis points (bps) to 13.8 per cent due to better operating efficiencies and sharp improvement in industry business’ margins. Net profit margin (NPM) adjusted for dividend income and profit sale of subsidiaries last year also surged 107 bps to 8.8 per cent.

In the September quarter, the company reported highest growth of 22 per cent y-o-y in sales at `3,061 crore, while OPM and NPM jumped 334 bps and 226 bps to 13.1 per cent and 8.3 per cent, respectively.

Order book (OB) growth of 32 per cent at `13,584 crore has largely come from long cycle-led energy sector (70 per cent share in total OB), which means stable growth in the top line. However, the management has expressed caution about competition in all its businesses. Analysts expect downside risk to margin and suggest investors keep a tab on them despite the company remaining focused on its goal of profitable growth.

Siemens announced 250 per cent dividend ( `5on `2 face value) for second consecutive year. Most analysts are optimistic about the prospects of the company and recommend buying the stock, which trades at 26 times and 21 times FY11 and FY12 estimated earnings, respectively.
source - business standard