January 19, 2002

• Siemens Ltd reported a 17% yoy increase in net sales and a 15% yoy increase in total income for 1QFY02. The company’s financial year ends on September 30^th. Net profit in 1QFY02 has grown by a healthy 29% yoy. The sales improvement was led by strong performance of the Automation & Drives, Medical Solutions and Power Transmissions & Distribution businesses.

• Operating profit has increased by 33% yoy and OPM also improved from 10.1% to 11.7%. Personnel costs (Rs366m to Rs363m) and other costs (down from Rs426m to Rs421m) have contributed to the improvement in OPM.

• The segregated lease and other income is not available. The lease & other income has declined by 2% yoy. More importantly this head includes Rs69m on account of sale of investments. This indicates that going forward the lease & other income will likely decline sharply.

• During 1QFY02 new order intake was Rs3.3bn, an increase of 45% yoy. The volume drivers were the Medical Solutions, Power T&D and Automation & Drives businesses. The outstanding order book position as on December 31, 2001 stood at Rs8.33bn (Rs8.2bn in Dec 2000). This indicates that inspite of high order intake, the outstanding order book is practically flat. This is because the present order being booked are of low lead-time and require faster execution. The company says that market conditions are declining and recessionary trends continue in the economy.

• A per the ongoing buyback program, the Company bought back shares aggregating Rs465.23m and as a result the shareholding of Siemens AG has gone up to 54.63% from 45.37%.

• As a part of its portfolio restructuring, the company has divested its stake in Siemens Public Communications Network in favor of Siemens AG. Siemens presently has 4,140 employees, a further reduction of about 200 employees in the last one-year.

• Segmentwise performance is given in Table 2 below. While Automation & Drives and Power segment contribute the maximum to the turnover, the PBIT margins in these businesses are the lowest. Real Estate and Information & Communication are the businesses have the highest margins, but are not the fastest growing businesses.

• At Rs196, the stock is trading at 8.8x annualized FY02E and 10.1xFY01A. Valuations appear attractive and the stock will see some upside in the near term.

Table 1: Results Summary

Source: Company

Table 2: Segmentwise results

Source: Company

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