Schneider Electric soars 14%, hits over 7-year high on positive outlook

Shares of Schneider Electric Infrastructure hit an over seven-year high of Rs 202.15, as they rallied 14 per cent on the BSE in Tuesday’s intra-day trade on the back of heavy volumes in an otherwise weak market owing to a positive business outlook. In past 12 trading sessions, the stock price of the company has zoomed 44 per cent.

The stock surpassed its previous high of Rs 195.40 touched on October 4, 2022. It was trading at its highest level since August 2015. The stock had hit a record high of Rs 241 on June 24, 2015.

At 11:49 AM; Schneider Electric traded 13 per cent higher at Rs 200.60, as compared to 0.94 per cent decline in the S&P BSE Sensex. The average trading volumes at the counter jumped nearly four-fold today. A combined 7.63 million equity shares had changed hands on the NSE and BSE so far.

Schneider Electric is engaged in the business of manufacturing, designing, building and servicing technologically advanced products and systems for electricity distribution including products such as distribution transformers, medium voltage switchgears, medium and low voltage protection relays and electricity distribution and automation equipment.

For the first half (April to September) of the financial year 2022-23 (H1FY23), Schneider Electric had reported a profit after tax of Rs 35.2 crore, against a loss of Rs 24.8 crore in H1FY22. Sales grew 34.3 per cent year-on-year (YoY) at Rs 792 crore. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved 560 bps YoY to 6.7 per cent from 1.1 per cent in H1FY22.

During the quarter, the company’s orders declined by 3.2 per cent to Rs 298.89 crore. The company said in Q2 orders drop due to shifting of some orders finalization to October-December quarter (Q3), growth is driven by Diffused and MMM segment.

With a number of reforms being introduced in the Power & Grid sector, the company expects it to remain resilient. This, along with the focus on renewable energy, privatisation, and efforts to cut losses in the Transmission & Distribution (T&D) sector, are favourable indicators for the company.

The Transportation segment is also set to see several exciting projects — including bullet trains and corridors — come to fruition. The management expects that they will bolster the company’s order pipeline once completed.

In the Minerals, Metals and Mining sector, the management expecta that the increased amount of CAPEX will increase the capacity for the production of cement and steel. This, along with the focus on sustainability initiatives in the sector, may prove to enhance the demand for services in the short term. “As the Oil & Gas sector remains cyclical, we expect the demand in this sector to remain muted in the short term, accompanied for a shift towards an increasing demand for renewable energy,” Schneider Electric said in its FY22 annual report.

Going forward, the management believes an overall positive outlook for the segments that drive the growth of the company. The power sector in India continues to remain one of the government’s primary focus areas, as an increasing number of reforms involving digitalisation are expected to be implemented in the next few years.

In the transportation sector, the development of the metro lines across India, the modernisation of the railways, and focus on building more and better airports indicate that these are up for expansion in the near future. Oil and gas is also expected to undergo a period of transition as the case for renewables becomes undeniably stronger, the company said.