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Schneider Electric Infrastructure Ltd (SEIL) witnessed a descent quarter and PAT remained in the positive territory for the fifth consecutive quarter. Revenues declined marginally by 4.3% on high base (+15% for 9MFY23) while gross margins at 29.1% was higher by +105bps YoY on lower material cost (+100bps YoY for 9MFY23). EBITDA margins was lower by 90bps YoY on higher employee cost while it is 200bps higher for 9MFY23 and have seen good improvement and expected to improve the overall margin profile for the full year. APAT at ?435 mn (-17% YoY) while its higher by 34% for 9MFY23 and has been in the positive territory for fifth consecutive quarter. Order inflow at ?3.1bn was higher by 6.7% driven by Mobility, Diffused and P&G segment and was 10% higher for 9MFY23 at ?9.8bn. Management remains positive on the business outlook across its traditional and emerging segments and expect momentum to continue as core data improves which reflects on the overall business it operates in. It expects positive opportunities further supported by the recent Budget which highlights impetus to growth for SEIL key segments across its traditional (Power &Grid, Metals, Minerals & mining and Transportation) and emerging segments (E-Mobility, cloud & service provider and renewables) and providing more avenues for digitization.

SEIL remains focused on its service business and providing native connectivity to bridge Capex & Opex to unlock service growth and recurring business ahead. Overall SEIL remains well positioned across its core segments and adequate digitalization opportunities with positive outlook ahead. Further, company’s performance has been consistent for FY22 and 9MFY23 wherein execution have remained strong after a long hiatus and expect it to continue with strong order book and pipeline ahead. Overall company remains optimistic in the short to mid-term with support from the government in the form of investment, reforms and policies. Considering the 9MFY23 performance we have tweaked our estimates accordingly and remain positive ahead. Hence, we maintain BUY with a revised TP of ?245 as we roll forward our estimates to FY25E.

Outlook and Valuation

Business momentum remains positive across its traditional and emerging businesses and we expect this to continue as core data improves which reflects on the overall business it operates in with adequate digitalization opportunities and positive outlook ahead. Recent Budget too highlights impetus to growth of SEIL key segments. Further, company’s performance has been consistent for FY22 and 9MFY23 wherein execution have remained strong after a long hiatus and expect it to continue with strong order book and pipeline ahead. Overall company remains optimistic with support from the government in the form of investment, reforms and policies. Considering the 9MFY23 performance we have tweaked our estimates accordingly and remain positive ahead. Hence, we maintain BUY with a revised TP of ?245 as we roll forward our estimates to FY25E.

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