#SALES #GROWTH 5 Year CAGR 8.9%

n FY23 (Oct 2022-Sep 2023), net sales grew by 21% YoY to ₹19,554 cr. The company witnessed strong demand across all the sectors. The increase was backed by pent-up demand, high commodity prices and increased competitiveness. During the year, new orders grew by ~139% YoY to ₹46,383 cr and order backlog as of 31St September 2023 stood at ₹45,523 cr. During 9M FY24, sales grew by 15% YoY to ₹15,779 cr, backed by project executions and growth in mobility, smart infrastructure and digital industries businesses. New orders stood at ₹17,400 cr during the period, supported by smart infrastructure, mobility and energy segments. However, it witnessed lower order intake in the digital industries segment. Going ahead, government spending on infrastructure and rising demand for the products is expected to bring momentum across segments.

#EBITDA #GROWTH 5 Year CAGR 13.4%

In FY23, EBITDA stood at ₹2,487 cr, up by 42% YoY. Company observed a growth on account of rising sales volume across different segments. Major expenses for the company constituted project bought outs 27%, purchase of traded goods 23% and cost of materials 20%. In 9M FY24, EBITDA grew by 21% YoY to ₹2,166 cr. As a % of revenue, cost of raw materials and employee benefit expenses witnessed an improvement that led to the growth. Going forward, it might witness a downward trend in the commodity prices and the business is expected to be in line with the market growth.

#PAT #GROWTH 5 Year CAGR 16.8%

In FY23, PAT increased by 55% YoY to ₹1,962 cr, mainly driven by higher volumes, better price extraction and positive forex & commodity effects. On a YoY basis, the other income increased by 61%. In 9M FY24, PAT grew by 36% YoY to ₹1,887 cr, backed by improved operating profit, higher other income and lower effective tax rate. Other income grew by 83% YoY on account of sale of property of ₹221 cr during 9M FY24 v/s ₹24 cr in 9M FY23 & dividend received from subsidiaries of ₹146 cr v/s ₹78 cr in 9M FY23. Going forward, increased demand for automation & digitalization, introduction of innovative solutions, strategic acquisitions and government’s stimulus spending on infrastructure would drive topline growth, which would further lead to growth in profits.

#EBITDA #MARGIN

In FY23, EBITDA margin expanded by 183 bps YoY to 12.7%, backed by higher operating profit. In 9M FY24, EBITDA margin expanded by 79 bps YoY to 13.7% led by gross margin expansion of 259 bps YoY, largely due to decreasing cost of raw materials and employee benefit expenses. Segment-wise during 9M FY24, smart infrastructure expanded by 299 bps YoY to 13% v/s 10% in 9M FY23; energy expanded by 158 bps YoY to 13% v/s 11% in 9M FY23; mobility expanded by 21 bps YoY to 7% v/s 6% in 9M FY23. While digital industries and portfolio companies witnessed a contraction of 211 bps and 337 bps YoY to 13% and 9%, respectively v/s 15% and 13%, respectively in 9M FY23. In the near term, the company’s increased focus on digital software is expected to be margin accretive.

#Management of the company

The management of the company continues to focus on profitable growth, besides introducing innovative solutions and enhancing its digitalization offerings across all business segments. During FY23, the company’s businesses performed well with a renewed interest from customers particularly in the electronics and infrastructure. Management is optimistic of government introduced reforms to stimulate India’s GDP and believes to benefit from its various initiatives like Make in India, Digital India, Power for AII, Smart cities, Modernization of the railways and Atmanirbhar Bharat. The board of directors approved the proposal to demerge its energy business into a separate legal entity, i.e., Siemens Energy India Limited (currently a wholly owned subsidiary of Siemens Limited). Siemens Energy India Limited will be subsequently listed and will mirror the shareholding of Siemens Limited, upon the receipt of requisite approval.

#COMPANY #POTENTIAL

• The Government of India has announced the national infrastructure pipeline which envisages major investments in infrastructure for the next few years. As per Economic survey 2019-20, energy sector projects account for the highest share (24%) in the ₹111 lakh crore national infrastructure pipeline for the period 2019-20 to 2024-25. (Source- IBEF) • Growing population along with increasing electrification and per-capita usage will provide further impetus to the power sector. • Innovation and investment in infrastructure is the key to scaling up manufacturing and growth. India's GDP is expected to grow on the back of innovation, globalization, favorable demographics, and reforms. Domestic demand and consumption will remain the country's strongest economic engine and India has an opportunity to catapult itself as a specialized manufacturing hub in select sectors. • Demand continues to grow in the manufacturing industry for automation, cloud-based digital services, data analytics solutions and digitalization in its push towards Industry 4.0. • Foreign participation in the development and financing of generation and transmission assets, engineering services, equipment supply and technology collaboration in nuclear and clean coal technologies is also expected to increase. • The Union Budget has allocated ~33% higher capital expenditure compared to the previous year.

#Company #Outlook

A consortium between Siemens AG, Siemens Mobility GmbH, Siemens Limited and Alstom Transport India Limited has been awarded the contract for the electrical and mechanical system works of a project by Pune IT City Metro Rail Limited. The project is to be completed in 39 months. Siemens Ltd will provide project management, turnkey electrification, signaling, communications and depot works (equipment) for this project. The order size of Siemens Ltd is to the extent of ₹900 crore. • The company had divested its low voltage motors and geared motors businesses including the respective customer service business to Siemens Large Drives India Private Limited as a going concern on a slump sale basis for a cash consideration of ₹2,200 crore with effect from 1st October 2023. The rationale behind this is to carve out low voltage motors globally into a separate legal entity. The application of these products would be primarily in machine building, metals, food & beverages, chemicals, power & minerals. • It made a joint announcement with Tata Power Delhi Distribution Limited of the successful deployment of Smart Metering Technology for over 2 lakh smart meters in North Delhi. The technology enables timely and accurate collection of electricity meter data leading to increased visibility of the consumer network and reduction in carbon emissions. • The company has emerged as the lowest bidder (L1) for the 9000 HP Electric Locomotives project in Dahod, Gujarat, India (the Project) and received two orders from Gujrat Metro Rail Corporation. The company’s share as a part of the consortium amounts to ₹678 crore. The orders are for Surat Metro Phase 1 and Ahmedabad Metro Phase 2. In addition, the company would also provide advanced digital solutions such as supervisory control and data acquisition (SCADA) solution for both metros. • The company received an order worth ₹26,000 crore to supply 1,200 locomotives of 9000 horsepower (HP) for Indian Railways. The contract includes 35 years of full-service maintenance, and the locomotives would be delivered over an 11-year period. • In November 2023, the company announced plan to double the power transformer capacity with a capital investment of ₹360 crore over the next 2-3 years.

Siemens Limited 6900-7400
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CRISIL Company report

CRISIL (Credit Rating Information Services of India Limited) was incorporated in 1987. It is India’s foremost provider of ratings, data, research, analytics, and solutions. They operates their business from India, United States (US), United Kingdom (UK), Argentina, Poland, China, Hong Kong, Singapore and United Arab Emirates (UAE). It is owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics & data to the capital and commodity markets worldwide. It serves clients ranging from MSME to large corporates, investors and top global financial institutions. They also work with governments & policy makers in the infrastructure space in India and other emerging markets. It help clients manage and mitigate risks, take pricing and valuation decisions, reduce time to market, generate more revenue, and enhance returns. By helping shape public policy on infrastructure in emerging markets, CRISIL helps catalyze economic growth and development in these geographies. The company has three business segments1) Research- Research segment includes global research and risk solutions, industry reports, customized research assignments, subscription to data services, independent equity research (IER), IPO gradings and training. 2) Ratings- Ratings services includes credit ratings for corporates, banks, bank loans, small and medium enterprises (SME), credit analysis services, grading services and global analytical services. 3) Advisory- It provides advisory services and a comprehensive range of risk management tools, analytics and solutions to financial institutions, banks and corporates in India.

#SALES #GROWTH 5 Year CAGR 12.4%

In CY23, the sales increased by 13% YoY to ₹3,140 cr, driven by growth in both ratings and research business by 16% and 12%, respectively. The bond issuances declined in H2 CY23, on account of increasing geopolitical uncertainties and the consequent hardening of bond yields. Both the global divisions witnessed growth amidst pressure on discretionary spends by financial services clients. GR&RS (Global Research & Risk Solutions) division saw traction in lending and buyside segment, while GBA (Global Benchmarking Analytics) saw momentum in CIB, driven by emphasis on client engagement. In 9M CY24, the sales increased by 5.6% YoY to ₹2,347 cr, largely driven by momentum in bond issuances and bank loan ratings. However, research division was impacted on account of slowdown in the discretionary spendings.

#EBITDA #GROWTH 5 Year CAGR 13.5%

During CY23, the EBITDA stood at ₹881 cr, a growth of 20.7% YoY. The major expenses mainly comprised of employee benefit expense and other expenses. During 9M CY24, the EBITDA stood at ₹623 cr, recording a growth of 3.9% YoY on account of increase in other expenses.

#PAT #GROWTH 5 Year CAGR 12.6%

During CY23, the PAT stood at ₹658 cr, recording a growth of 17% YoY. The impact of foreign exchange movement was not favorable as compared with the same period last year. During 9M CY24, the PAT stood at ₹459 cr, recording a growth of 2.4% YoY. The effective tax rate of the company inched up on account of increase in tax rates in one of the ex-India jurisdictions.

#Management

Mr. Yann Le Pallec is Executive Managing Director and Global Head of Ratings for S&P Global Ratings. He oversees a group of 2,200 analysts and support staff present in 28 countries and covering more than one million outstanding ratings on entities and securities across a wide range of sectors including governments, corporations, financial institutions and structured finance. Amish Mehta is the MD and CEO of CRISIL. He leads CRISIL’s Indian and global businesses, steering its efforts to deliver high-quality analytics, opinions & solutions to corporations, investors, financial institutions, governments. policymakers and The management believes that the two pillars of business growth & traction would be talent and technology. They would continue to invest in the same over medium to long term which would drive the revenue.

#Future #Plans

• In CY23, wholesale bank credit is expected to maintain its growth trajectory in comparison to the past two years, supported by continuing economic recovery and higher working capital funding requirements in an inflationary environment. • Beyond the credit growth certain structural changes from SEBI like framework for AA and above rated companies to borrow 25% from the bond market, incentives from RBI to corporates to borrow from bond market rather than banks, could auger well for the bond market. • This year has another geopolitical risk in the form of elections in more than 60 countries, including US. The outcome of these elections has potential to impact global business sentiments. • They would make accelerated investment towards talent and technology. • They would also continue to focus on customer centric innovation and solutions which would address the niche needs of their clients. • They continue to focus on expanding their reach to Tier 2 & Tier 3 institutions through its partnership channels in the research division. • They anticipate the capital market issuances will revive in the H2 CY24 with softening interest rates and gradual revival of private sector capex. • As majority of the revenue is generated outside India, so the company faces the currency risk which would be a key monitorable factor going forward. • They continue to drive opportunity in emerging markets, Middle East, South Asia and Africa for the infrastructure advisory space. They are also in discussion across multilateral agencies and different countries to increase investments on infrastructure. • The ESG rating is likely an opportunity for the company in the ratings business, going forward.