{"id":722,"date":"2020-01-29T11:21:05","date_gmt":"2020-01-29T11:21:05","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=722"},"modified":"2020-02-03T04:28:50","modified_gmt":"2020-02-03T04:28:50","slug":"cs-electric-acquisition-is-margin-accretive-siemens-sunil-mathur-md-ceo-siemens-india","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2020\/01\/29\/cs-electric-acquisition-is-margin-accretive-siemens-sunil-mathur-md-ceo-siemens-india\/","title":{"rendered":"C&#038;S Electric acquisition is margin accretive: Siemens: Sunil Mathur, MD &#038; CEO, Siemens India"},"content":{"rendered":"<p style=\"font-weight: 400;\"><strong>Update\u00a0on the Indian Equity Market:<\/strong><\/p>\n<p style=\"font-weight: 400;\">On Tuesday, NIFTY closed at 12,060 (-0.5% down its previous close).\u00a0 The top gainers for the day were BPCL (+2.5%), HDFC (+1.6%) and Bajaj Finance (+1.2%). The stocks that were down in today\u2019s session included Vedanta (-4.5%), Bharti Airtel (-4.4%) and Tata Motors (-3.2%). The sectoral gainers for the day were NIFTY Financial services (+0.3%) and NIFTY IT (+0.3%). The top losing sectors were NIFTY Metal (-2.4%), NIFTY Auto (-1.2%) and NIFTY Media (-1.1%).<\/p>\n<p style=\"font-weight: 400;\"><u>Excerpts from an interview with Mr Sunil Mathur, Managing Director and Chief Executive Officer, Siemens India from Livemint dated 28<sup>th\u00a0<\/sup>January 2020:<\/u><\/p>\n<ul style=\"font-weight: 400;\">\n<li>C&amp;S Electric is an excellent acquisition for them. They are in a space that is a market for the future. Infrastructure is a huge market in India. A lot needs to be done and this is in the low voltage space of infrastructure.<\/li>\n<li>They were present in low voltage but very strong on the industrial side. What they lacked was a presence on the infrastructure side.<\/li>\n<li>They are looking at smart infrastructure as being a thrust area for them in the country and so this is perfect in that space. So, strategically it is a very good growth area and it is EPS accretive as well.<\/li>\n<li>C&amp;S Electric did about \u20b91,200 cr in terms of revenue and profitability in the range of 10-15% in last year. They are growing very well.<\/li>\n<li>They see a huge potential in this business not only from a domestic purpose but also from an export perspective. They see markets that are hugely competitive and what they would like to use this acquisition for is to also develop a manufacturing hub here and they can use them for design and manufacturing into low-cost markets outside the country.<\/li>\n<li>The profitability is in the 10-15% range, and if we look at the multiples from that perspective, both the revenue multiples as well as the EBITDA multiples, they are very comparable to the Schneider-L&amp;T deal as well as compared to a lot of the other deals in the same space.<\/li>\n<li>It will improve RoCE because they are sitting on a lot of cash. They have \u20b95,000 cr of cash. This is a \u20b92,000 cr acquisition. So this should improve their RoCE and as it is margin accretive so it will help return on investment (RoIs) as well.<\/li>\n<li>A lot of it depends on when they get the regulatory approvals and when they start up over there, but if we take a volume of \u20b91,200 cr topline and take a 10% bottom line and we are already there. Of course, that is a starting point.<\/li>\n<li>For export businesses, they will have to use their global network to start getting into customers and introducing their products to customers. So, they will build this up over a period of time but the potential is huge.<\/li>\n<li>The multiples today are terrifically high and so they have got to balance all that together and see whether it makes sense or not.<\/li>\n<\/ul>\n<p style=\"font-weight: 400;\">Consensus Estimate: (Source: market screener website)<\/p>\n<ul style=\"font-weight: 400;\">\n<li>The closing price of Siemens Ltd was\u00a0\u20b9 1,502\/- as on 28-January-2020. It traded at 49x\/ 36x\/ 31x the consensus earnings estimate of\u00a0\u20b9\u00a030.5\/ 41.7\/ 48.6 for FY20E\/ FY21E\/ FY22E respectively.<\/li>\n<li>Consensus target price is \u20b9 1,462\/- which implies a PE multiple of 30x on FY22E EPS of \u20b9 48.6\/-<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Update\u00a0on the Indian Equity Market: On Tuesday, NIFTY closed at 12,060 (-0.5% down its previous close).\u00a0 The top gainers for the day were BPCL (+2.5%), HDFC (+1.6%) and Bajaj Finance (+1.2%). The stocks that were down in today\u2019s session included Vedanta (-4.5%), Bharti Airtel (-4.4%) and Tata Motors (-3.2%). The sectoral gainers for the day [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/722"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=722"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/722\/revisions"}],"predecessor-version":[{"id":723,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/722\/revisions\/723"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}