Buy Siemens; target of Rs 7500: Motilal Oswal

Motilal Oswal is bullish on Siemens has recommended buy rating on the stock with a target price of Rs 7500 in its research report dated January 21, 2025.

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January 22, 2025 / 13:12 IST

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Motilal Oswal's research report on Siemens

Siemens (SIEM) in its FY24 annual report emphasized its strategy to capitalize on the opportunity potential that exists in India from diverse sectors and industries, spurred by favorable government policies, a relatively sanguine macroeconomic situation, and the ongoing global energy transition while also acknowledging the transient hiccups in select segments. Nevertheless, underscoring its intent to participate in India’s long-term growth potential, SIEM in FY24 announced the expansion of its GIS, vacuum interrupter, power transformer, and metro train manufacturing facilities for a cumulative outlay of INR10b. We believe that a selective approach for HVDC projects and weak inflow for ex-Energy segments due to slower-than-expected pick up in private capex may weigh on the near-term performance of SIEM. However, company is well placed to capitalise on expected ramp up in government and private capex over medium to long term. We downgrade our earnings by 3%/4%/5% for FY25/26/27 and revise our valuation multiple downwards from 70x to 65x on two-year forward earnings to bake in a slower pickup in inflows vs. our earlier expectations. We reiterate our BUY rating on the stock with a revised TP of INR7,500 (vs. INR8,000 earlier).

Outlook

We reduce our valuation multiple to 65x from 70x on a two-year forward earnings basis to bake in a slower pick-up in inflows compared to our earlier expectations. We reiterate our BUY rating on the stock with a revised TP of INR7,500 (vs. INR8,000 earlier).

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