Analyst Meet / AGM - Analyst Meet
Expects better execution and order book going forward
The company held its Analyst Meet on 18th May 2016 and was addressed by Mr. Sunil Mathur MD and CEO
Key Highlights
Order inflow for H1 ended on Mar'16 stood at Rs 63.9 billion up by around 35% YoY. Sales growth of around 5.5% for H1 ended Mar'16 on YoY basis is largely due to lower opening order book. The company has an order book position as on Mar'16 of more than 1 times sales.
The healthcare business has been sold by Siemens India in line with the Parent's decision globally. So with effective from July'16 onwards, healthcare segment will no longer be a part of Siemens.
The company is present in Transport segment through rail electrification, signaling, metro rail and DFCC, It is also in to T&D segment upto 765 KV technology, construction of smart cities, UMPP power generation projects and other manufacturing sectors.
Power and Gas division offers products and solutions for reliable, efficient and clean power generation from fossil fuels and for oil & gas applications. The segment has order inflow of Rs 7.4 billion up by 23% as on Mar'16. Sales for H1 ended Mar'16 was lower by 20% due to lower opening order book position at the start of the year i.e. Oct'15. The order growth was mainly driven by industrial steam turbine orders. Once the existing thermal PLF markets improve, industrial steam turbine market should improve. Gas availability after FY'17 should also revive the gas turbine market.
The energy management division consists of products, solutions and services for the transmission and distribution of electrical energy. The order inflow is up by 65% to Rs 22.9 billion as on Mar'16. Exports and Gas insulated systems drove orders higher. The segment promises strong outlook with smart city implementation, technology upgradation of existing T&D grid and further capex plans of PGCIL and SEB's.
Mobility segment supplies solutions for passenger and freight transportation, including rail vehicles, rail automation and rail electrification systems. The segment saw order inflow of Rs 7.9 billion, up by 27% as on H1 ended Mar'16 due to increase in orders for metro electrification and ordering in traction motors. The segment outlook is most promising with planned capex of around Rs 8.5 trillion for upgradation of railway network and rolling stock and dedicated freight corridors.
The digital factory division offers software products and automation technologies for industrial applications covering the entire life cycle, from product design and production to after sales service for discrete manufacturing industries such as automotive, F&B etc. The order inflow was up by 9% to Rs 8.10 billion. Orders from automotive and pharmaceutical segment picked up during the period however capex from other private players remain sluggish. Growing demand in food processing sector and green field and brown field projects from automobile players will drive the order book and growth from this segment.
The process industries and drives segment offers a comprehensive portfolio for industrial application and solutions in the field of automation and drives for process industries such as cement and steel. The order book as on H1 FY'16 ended on Mar'16 stood at Rs 6.70 billion up by 12% YoY. While the outlook for the segment is uncertain, the demand for automation, drives and motors will increase from the expected increase in investment in infrastructure segment from the government.
Exports accounted for around 18-20% of total sales for H1 ended Mar'16. Exports sales will account for around 20-22% going forward.
The company continues its efforts on localization in line with Make in India concept.
As per the management, while the capex cycle is yet not fully started, it can start any time in next 6-9 months period and the company is ready for the improvement in capex cycle in terms of capacity and scalability.
The order book has better margins compared to past orders. Despite increase in competition from China and other local Indian players, the company was able to grab better margin orders. Going forward margins can improve.
Company expects healthy order backlog and better execution going forward.
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