Siemens surges 10%, hits new high on strong March quarter results

Siemens shares, on Wednesday, surged 10 per cent, hitting a new high of Rs 2,143.20, on the BSE in intra-day trade after the company reported a strong set of numbers for the quarter ended March 2021 (Q2FY21), with healthy order book position. The stock surpassed its previous high of Rs 2,055.10, hit on February 24, 2021.

The company’s consolidated net profit after tax from continuing operations grew 91 per cent to Rs 321.90 crore, against Rs 168.30 crore in the corresponding quarter of previous year. Revenue from operations jumped 32 per cent year on year (YoY) to Rs 3,484 crore from Rs 2,640 crore in a year ago quarter.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) doubled to Rs 440 crore from Rs 220 crore, aided by lower employee costs and other expenses. The EBITDA margin improved 490 basis points (bps) YoY at 13.2 per cent.

Siemens registered new orders from continuing operations of Rs 3,309 crore, registering a 16.9 per cent increase over the same period last year. The company’s order backlog stands at a healthy Rs 12,677 crore. The management said there has been increased demand in power transmission, digital grid and distribution systems businesses. The company’s digital industries segment saw growth in the machine tool and process automation businesses. The March-end quarter demonstrated a steady revival in the economy with both private and public sectors beginning to invest in anticipation of future growth, it said.

Adjusted for strong cuts in other expenses (7.3 per cent of sales v/s 13.8 per cent in 2QFY20), the margin trend seems to be under pressure and needs monitoring over the next 1–2 quarters. Other income declined 33 per cent YoY to Rs 54 crore, despite a healthy cash balance, suggesting the impact of declining interest rates on excess cash on the balance sheet, Motilal Oswal Securities said in result update.

The company is poised to benefit over the long term, led by the niche industrial automation and digitalization businesses. While the pace of recovery is very gradual, re-rating of the stock has been quite steep. The ongoing second Covid wave poses a risk to execution, the brokerage firm said.

At 10:11 am, Siemens was trading 9 per cent higher at Rs 2,116 on the BSE, as compared to 0.77 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped over five-fold with a combined 2.87 million equity shares changing hands on the NSE and BSE, so far.