X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Siemens buyback: Worth it? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • May 7, 2001

    Siemens buyback: Worth it?

    Siemens Limited's Board has approved a proposal to buyback its equity shares upto an aggregate sum not exceeding Rs 805 m, at a price not exceeding Rs 250 per share from the open market. The buyback offer is at a 21% premium to the current market price.

    (Rs m) 2QFY01 2QFY02 Change 1HFY01 1HFY02 Change
    Net Sales 2,725.0 3,126.3 14.7% 5,001.0 5,271.3 5.4%
    Other Income 218.0 112.4 -48.4% 323.0 344.4 6.6%
    Expenditure 2,562.0 2,927.2 14.3% 4,797.0 5,056.2 5.4%
    Operating Profit (EBDIT) 163.0 199.2 22.2% 204.0 215.1 5.4%
    Operating Profit Margin (%) 6.0% 6.4%   4.1% 4.1%  
    Interest 18 7 -62.7% 17 11 -35.3%
    Depreciation 76 75 -1.1% 158 151 -4.4%
    Profit before Tax 268 230 -14.3% 332 399 20.2%
    Tax 8 2 -69.6% 15 12 -20.0%
    Profit after Tax/(Loss) 260 227 -12.6% 317 387 22.1%
    Net profit margin (%) 9.5% 7.3%   6.3% 7.3%  
    No. of Shares (eoy) (m) 35.5 35.5   35.5 35.5  
    Diluted earnings per share* 29.3 25.6   17.9 21.8  
    *(annualised)            
    Current P/e ratio         9.5  

    Siemens India is a 51% subsidiary of German engineering behemoth Siemens AG. In India, Siemens manufactures automation systems, components, medical equipment, motors and drivers, power generating equipment and switchgears. It derives 40-45 percent of revenues from standard products (automation, ancillary equipment). The balance is split between power projects, industrial projects and switchgears.

    The stock had surged initially on the news of the buyback. However, the euphoria seems to have died down. This is probably because the premium on the buyback is not very high. Moreover, the company is getting back on track after a restructuring exercise which included pruning the debt burden and a voluntary retirement scheme to cut employee costs.

    The company has declared an encouraging 15% growth in turnover in its 2QFY02 (quarter ended March 2001). But a huge 48% decline in its other income has led to a 13% fall in its bottomline during the same period. On a consolidated half yearly basis Siemens has declared a 22% bottomline growth backed by only a 5% growth in turnover. However, during the first half of FY02 the company has been helped by a 7% rise in its other income.

    Another reason because of which investors might find the offer unattractive is the fact that it is at a huge 59% discount to Siemens 52 week high (Rs 397). However, another way to look at it is that the Siemens management itself feels that Rs 250 is correct price for its business, and therefore it may be the right time to exit.

    But the company's earnings per share (EPS) is likely to improve post the buyback plan and so are its valuations. Currently, the valuations of companies are under pressure. However, when the economy turns and shows signs of a recovery, the valuations are likely to improve for the better.

    At Rs 206 the stock trades at a P/e of 9.5x the first half annualised FY02 earnings. At Rs 250 the stock's P/e multiple works out to be 11.5x annualised 1HFY02.

     

     

    Equitymaster requests your view! Post a comment on "Siemens buyback: Worth it?". Click here!

      
     

    More Views on News

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    ABB: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    L&T: Amidst a Challenging Business Environment (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Bank credit to industry remained muted and investment momentum was driven mostly by public sector spending.

    L&T: Private Sector Capex Remains in a Tizzy (Quarterly Results Update - Detailed)

    Jul 24, 2017

    Vast majority of private players remain more concerned with debt payback rather than starting new projects.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    SIEMENS SHARE PRICE


    Aug 21, 2017 03:37 PM

    TRACK SIEMENS

    • Track your investment in SIEMENS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    SIEMENS 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE SIEMENS WITH

    MARKET STATS