New Delhi, Mar 20: The market seem to revaluing Siemens India. The scrip, which was shunned by marketmen after the poor showing by the company, has begun attracting considerable buying interest. In just a few days, the scrip has shot up from Rs 172 to over Rs 200. The change in perception could be attributed to the possible economic revival which would give a fillip to heavy engineering companies like ABB, Bhel and Siemens. With ABB and Bhel already moving in anticipation of such a revival, Siemens is the only one with a scope for appreciation.The low valuation for the Siemens scrip seems to have found favour with the punters. The scrip currently quotes at its six-year low and with the fortunes of the industry slated to look up, there is room for further growth in Siemens. The scrip has seen an all-time high of Rs 720. Compared with this, ABB's scrip has already risen to Rs 474 which is more than mid-way from its all-time high. Similarly, Bhel has risen to Rs 353 which is close to its all-time high of Rs450.
Siemens, which incurred a Rs 155.6 crore net loss for the 18-month period ended September 1997, has initiated a restructuring exercise to bring down costs. A voluntary retirement scheme has also been launched to shed some of the staff. The company hopes to bounce back within 12-24 months and an improved performance for fiscal 1997-98 is a possibility. The company has decided to focus on a four-point programme which encompasses improvement of the cost structure, productivity and quality; review of the business portfolio; restructuring of the balance sheet and asset disposal and amplified focus on human resources.
While market analysts say there is a slight chance to breakeven this year if the asset disposal programme progresses, the company says the ongoing restructuring will only be complete only after it regains a satisfactory profitability level i.e., a return on equity of about 20 per cent. Last year's poor performance was attributed to the slowdown of the economy, higher operating costs, lowercapacity utilisation, higher interest burden and additional risks provisions.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
