MOSL: Siemens (upgrade to Buy): Ready to reap the rewards; A play on digitalization and industry automation
Siemens: Ready to reap the rewards; A play on digitalization and industry automation
(SIEM IN, Mkt Cap USD5.7b, CMP INR1120, TP INR1290, 15% Upside, Upgrade to Buy)
- Multiple growth levers across industry segments: The strong focus on products/services has helped Siemens (SIEM) to mitigate the slowdown in industrial capex, as it has been able to capitalize on opex-related spending. We expect the trend to continue, driving strong growth for its products business. Any revival in capex spending can further strengthen its revenue trajectory (not a base-case scenario for us and consensus).
- Revenue CAGR (excl. Energy Management) estimated at 17% over FY18-21 (year ending September): We expect overall revenue growth to be driven by Building Technologies, Mobility, Digital Factory and Process Industries. However, as the HVDC order approaches completion, the Energy Management division (~40% of revenue) growth will likely come under pressure. Thus, we expect overall revenue CAGR of ~10% over FY18-21, but growth to pick up thereafter.
Siemens is an electronics products manufacturing group based in India. Co. is engaged in designing, manufacturing and marketing electrical and electronics products and equipments mainly for the power industry and the information and communication industry in India. Co. is also engaged in providing consultation services, providing back office support services and real estate management. Co. operates nine business segments with Healthcare as a separately managed business. Co.'s business segments include: Power and Gas; Wind Power and Renewables; Power Generation Services; Energy Management; Building Technologies; Mobility; Digital Factory; Process Industries and Drives; and Financial Services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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