Siemens dips 8% on profit booking after Q4 margin disappointment

Q4FY21 Ebitda margin declined 250 bps to 10.4 per cent as against 12.9 per cent in Q4FY20 impacted by higher other expenses, gross margins

Shares of Siemens dipped 8 per cent to Rs 2,099 on the BSE in Thursday’s intra-day trade on profit booking after the company reported 250 basis points (bps) decline in earnings before interest, taxes, depreciation, and amortization (ebitda) margin of 10.4 per cent in September quarter (Q4FY21) as against 12.9 per cent in Q4FY20 impacted by higher other expenses, gross margins.

The company has recommended a dividend of Rs 8 per equity share of Rs 2 each (400 per cent) for the Financial Year ended September 30, 2021.

The stock of the company engaged in heavy electric equipment business has fallen 14 per cent from its 52-week high of Rs 2,438.50 touched on November 10, 2021. It had hit a 52-week low of Rs 1,357.55 on November 25, 2020. In comparison, the S&P BSE Sensex was down 0.09 per cent at 58,290 at 09:26 am.

In Q4FY21, the company’s revenue grew 21.1 per cent year on year (YoY) at Rs 4,296 crore, driven by strong performance in key segments of Digital industries and Smart infrastructure segments. The reported profit after tax (PAT) was down 4.2 per cent YoY at Rs 321.6 crore, on account of increase in raw material and logistics costs.

Siemens said the company’s order backlog stands at an all-time high of Rs 13,520 crore. During the quarter, the company reported an increase of 4.9 per cent in new orders from continuing operations at Rs 3,378 crore as against Rs 3,220 crore in the same period last year.

As government investment in infrastructure continues and capacity utilization levels increase, the management believes tendering for private sector Capex will pick up in the months ahead. This will provide further impetus to the company’s continued strategy of profitable growth, it added.

“Siemens delivered a decent performance despite pandemic challenges and higher commodity costs. Smart infrastructure and digital industries segments recorded strong growth over 2020 levels. Decent order inflows further strengthened the already healthy order backlog. Overall, Siemens is expected to further strengthen its leadership position through further penetration of automation and digitization products & services across segments,” ICICI Securities said in a note.

“The company is poised to benefit over the long term, led by the niche Industrial Automation and Digitalization businesses. However, re-rating of the stock has been quite steep and fails to acknowledge the rising dependency on strong order inflows as well as margin risks in the business,” Motilal Oswal Financial Services said.