Thread by @ICICI_Direct

ICICI Direct Research's Gladiator Pick:
#Siemens
Recommended Price: 2990-3025
Target: 3420
Stop loss: 2790
Upside Target: 13%

(1/12)

Technical Rationale:
1. The capital goods sector has been one of the key outperformers of CY22 and is seen extending its up move after last one month’s higher base formation. The index has given a breakout from decade long consolidation in CY21.

(2/12)

2. Within the sector, we remain constructive on Siemens as it remains in strong up trend and has generated a breakout above a triangular consolidation of the last four months signalling resumption of up move, thus offering a fresh entry opportunity

(3/12)

3. Buying has emerged from 100 days EMA, which has acted as strong support on multiple occasions. In smaller timeframe, stock has witnessed retracement of just 50% of its preceding rally in the last 18 weeks signalling a robust price structure and a higher base formation

(4/12)

4. We expect the stock to extend the current up move and head towards 3420 levels in the coming months as it is the 161.8% external retracement of recent breather (3138-2672)

(5/12)

Siemens Ltd is a leader in technology solutions for smart, intelligent, building technologies, mobility, digital industries and power T&D. It operates mainly in 5 key segments: Energy/gas & power (34%), smart infrastructure (33%), digital industries (22%), mobility (7%)

(6/12)

It is well placed to gain from the overall energy market transformation from electrification to automation and digitisation. Q4FY22 (*September ending) it posted decent set of numbers. Cons revenue came in at Rs. 4657.1 cr, up 8.4% YoY

(7/12)

EBITDA came in at Rs. 516 cr with EBITDA margin of 11.1% (vs. 10.4% in Q4FY21). Gross margins expanded 240 bps to 32.9% on a YoY basis and 70 bps on a QoQ basis. Reported PAT came in at Rs. 652.3 cr, up 102.8% YoY

(8/12)

Gas & power (energy) segment grew 3.9% to Rs. 1631.6 cr. Smart infrastructure segment grew 9.1% to Rs. 1665.8 cr, Mobility segment revenue grew 41.7% YoY to Rs. 441.8 cr and digital industries segment revenue grew 20.5% to Rs. 944.4 cr

(9/12)

Order inflow wins were decent at Rs. 4009 cr, up 25% YoY led by all business segments. This has resulted in an order backlog at Rs. 17183 cr, which indicates a clear upswing in both public and private capex spending

(10/12)

With strong demand for short cycle products with clear traction from steel, cement, chemical, pharma, fertiliser industries to drive strong growth and margin expansion in smart infrastructure and digital industries segments

(11/12)

We expect revenue, EBITDA to grow at a CAGR of ~18%, 18.6%, respectively, in FY22-24E owing to strong traction in short cycle products and services
Report Link: icicidirect.com/mailimages/IDi…

(12/12)

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