MOSL: Morning India (17/May/19): 1. Siemens (Upgrade to Buy); 2. Bajaj Finance; 3. Hindalco Inds; 4. Petronet LNG; 5. Torrent Power; 6. JSW Energy; 7. Amara Raja Batt.; 8. Phoenix Mills; 9. DB Corp
MOrning India (17/May/19): 1. Siemens (Upgrade to Buy); 2. Bajaj Finance; 3. Hindalco Inds; 4. Petronet LNG; 5. Torrent Power; 6. JSW Energy; 7. Amara Raja Batt.; 8. Phoenix Mills; 9. DB Corp
Today’s top research idea
Siemens: Ready to reap the rewards; Upgrade to Buy
- Siemens is witnessing strong growth of 15%+ in its products/solutions business on account of digitalization and automation trend across various industries.
- It is also a key beneficiary of capex revival. Past 5 years (despite no broad based capex spending), while the revenue growth has been tepid at 5% CAGR, adj. PAT has growth at 19% CAGR.
- We forecast Revenue CAGR (excl. Energy Management) at 17% over FY18-21. Overall EBIT margin is expected to expand from 8.8% in FY18 to 10.1% in FY21, and adj PAT CAGR of 16.5%.
- We upgrade Siemens to Buy with TP of INR1,290 as valuations look comfortable at FY19E/20E P/E of 34.5x/32.9x versus its long-term average trading multiple of 49x.
Piping hot news
Essel Group to sell 3 road assets to CDPQ
- Essel Infraprojects Ltd has agreed to sell three of its road projects to Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest fund manager, said two people aware of the development, as the Subhash Chandra-promoted Essel Group company seeks to trim its massive debt. The assets are expected to fetch a combined enterprise value of ₹3,300-3,500 crore, said the first person cited above, requesting anonymity. “Essel is likely to formally announce the deal within the next three to four weeks," the person said. “The entire proceeds of the sale will be used towards debt repayment."
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