Siemens buyback: Worth it? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Siemens buyback: Worth it?

May 7, 2001

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

SIEMENS Announces Quarterly Results (1QFY21); Net Profit Down 101.9% (Quarterly Result Update)

Aug 18, 2020 | Updated on Aug 18, 2020

For the quarter ended June 2020, SIEMENS has posted a net profit of Rs 46 m (down 101.9% YoY). Sales on the other hand came in at Rs 13 bn (down 58.7% YoY). Read on for a complete analysis of SIEMENS's quarterly results.

SIEMENS Announces Quarterly Results (4QFY20); Net Profit Down 38.6% (Quarterly Result Update)

May 15, 2020 | Updated on May 15, 2020

For the quarter ended March 2020, SIEMENS has posted a net profit of Rs 2 bn (down 38.6% YoY). Sales on the other hand came in at Rs 28 bn (down 20.6% YoY). Read on for a complete analysis of SIEMENS's quarterly results.

Mazagon Dock Shipbuilders IPO: Should You Apply? (IPO)

Sep 29, 2020

Should you bet on this public sector defence shipbuilder?

SIEMENS 2017-18 Annual Report Analysis (Annual Result Update)

Sep 24, 2019 | Updated on Sep 24, 2019

Here's an analysis of the annual report of SIEMENS for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of SIEMENS. Also includes updates on the valuation of SIEMENS.

SIEMENS 2016-17 Annual Report Analysis (Annual Result Update)

Dec 20, 2018 | Updated on Dec 20, 2018

Here's an analysis of the annual report of SIEMENS for 2016-17. It includes a full income statement, balance sheet and cash flow analysis of SIEMENS. Also includes updates on the valuation of SIEMENS.

More Views on News

Most Popular

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

I Believe These Stocks Will Deliver the Most Outsized Returns in 2021 and Beyond (Profit Hunter)

Sep 23, 2020

Rules of the racetrack can help you bag the biggest gainers of the coming decade.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

SIEMENS SHARE PRICE


Oct 1, 2020 (Close)

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 - DONGFANG ELEC. COMPARISON

COMPARE SIEMENS WITH

MARKET STATS