Siemens: India Vs International - Views on News from Equitymaster

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

  • MyStocks


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

Siemens: India Vs International

Sep 18, 2003

Formed in 1847, Siemens AG, with current revenues of around 84 bn Euro, is one of the largest engineering conglomerates in the world. With the merger of three companies (Siemens & Halske, Siemens-Schuckertwerke AG, and Siemens-Reiniger-Werke AG) in 1966, the company came into its current shape. The company has operations in nearly 190 countries with an employee force of around 4.3 m. Siemens AG has a wide array of products, systems and services. Its key focus areas are information and communications, automation and control, power and infrastructure, medical solutions, transportation and lighting. In information and communication business, the company provides communication networks and mobile communication equipments. In automation, the company provides process automation solutions, sensors and metering equipments etc. It includes industrial solutions and services also. Its power division is into manufacturing and installation of power generation and T&D equipments. Apart from this, company is into medical services mainly providing hearing equipments and other automated operating equipments. The companyís transportation business mainly focuses on railway automation. It has presence in real estate and lighting business too.

The Indian subsidiary has also organised its business more or less in line with the parent company. Business profile of Siemens India.

Segmental break-up of the revenues
(Rs M) Siemens India Siemens International
Information and communication 5.3% 25.7%
Automation & Drives 31.2% 24.5%
Industrial solutions & services 9.8% 6.4%
Power 23.8% 23.7%
Transport 9.0% 7.3%
Health care & other services 18.8% 11.5%
Real estate 2.3% 0.9%

Information communication business contributes a major chunk to Siemens AGís revenues, as against 5% for the domestic subsidiary. However, Siemens India is trying to increase the revenues from this segment in India through tie-ups with cellular service providers. Currently, this segment earns PBIT margins of 7% for Siemens India as compared to Euro 292 m losses for the parent.

Automation business forms around 25% of the parentís revenues. But for the domestic entity, the contribution is higher at over 31%. However, in terms of PBIT margins Siemens AG stands better at 9.3% as compared to 4.8% for the domestic company. The Indian subsidiary has got large orders from this segment and expects the margins to improve going forward.

Power business contributes around 24% of the revenues for both for Siemens AG and Siemens India. Margins from this segment are also similar (14% for domestic and 15% for parent). We expect this segment to be the key bottomline driver in future for Siemens India. Since the company is both into generation and T&D business, the order intake for the Indian subsidiary is expected to grow going ahead. However, the parent company has seen a 25% decline in orders owing to lower demand globally.

The revenues from medical equipment segment have declined marginally for the parent company during 9mFY04. However, for Siemens India this segment brings good news as the parent company proposes to make India a manufacturing hub for medical equipment primarily for exports to Asian countries. Though this move could enhance the topline figure for the domestic company, poor margins remain a cause of concern.

Letís have a look at the geographical break-up of Siemens AGís revenues.

Share of international business in the parentís revenue pie has gone up from 75% in FY01 to 80% in FY03. The revenue from Asia-Pacific region has declined marginally mainly due to decline in the revenues from China subsidiary. However, China remains the largest contributor of revenues from this region till date accounting for around 4% of the total revenues. Siemens India contributed little more than 0.3% to the total revenues of the group in FY03.

(9m FY04) Siemens India Siemens International
(Rs m) (Euro m)
Net Sales 10,638 54,455
Orders received 8,347 56,444
EPS* 34.6 2.6
P/E 12.1 21.9
Market Cap/ Sales 1.0 0.7

At the current price of 420, the domestic stock trades at the P/E multiple of 12.1x, annualised 9mFY04 earnings. The Indian subsidiary has performed better than the parent company during 9mFY04 and the orderbook size has also increased, where as the order intake for the parent actually decreased during 9mFY04. However, the orderbook to sales ratio for the parent company is higher at 1x as compared to 0.8x for the Indian subsidiary. Looking at the business opportunities available, the scenario looks positive for the domestic company.

Equitymaster requests your view! Post a comment on "Siemens: India Vs International". Click here!


More Views on News

Siemens Soars 8% amid Strong Margin Growth. Can the Stock See More Gains? (Views On News)

May 12, 2021

A key highlight of Siemens' March quarter results was its robust operating performance.

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.

What Triggered the Over 10% Surge in Greaves Cotton Today? (Views On News)

Jun 17, 2021

Last week, the stock of Greaves Cotton has soared 23%. What's fueling the rally?

BHEL Shares Tumble 18% on Disappointing March Quarter Results (Views On News)

Jun 14, 2021

BHEL's net loss narrowed to Rs 10.4 bn in the March 2021 quarter.

Videocon Hits Upper Circuit After NCLT Clears Vedanta Group's Bid (Views On News)

Jun 9, 2021

The stock has fallen over 90% in the last five years. Will it recover?

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 17, 2021 (Close)


  • 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