Siemens Energy India shares rise 2% after strong Q2; Jefferies initiates coverage with 'buy'

Siemens Energy has delivered steady margin improvement over the past two quarters, even after adjusting for one-time items.

Shares of Siemens Energy India Ltd gained as much as 2 percent to Rs 3,049 on July 8, after the company’s strong Q2 and H1 FY25 performance, which beat market expectations despite the absence of comparable figures from the year-ago period due to the recent demerger.

The company reported a robust 24 percent sequential jump in revenue for the June quarter, while operating margins held firm at 19.1 percent, driven largely by strength in the power transmission business. However, margins in the power generation segment remained subdued. Notably, Siemens Energy has delivered steady margin improvement over the past two quarters, even after adjusting for one-time items.

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Following the development, Jefferies initiated coverage on the stock with a Buy rating and a target price of Rs 3,500 per share. This implies an upside potential of 17 percent from the last close. The brokerage forecasts a 50 percent CAGR in earnings per share (EPS) and 30 percent revenue CAGR over FY24–27. It expects operating leverage to drive a 460 basis point expansion in margins by FY27.

The target price values Siemens Energy at 65x PE on March 2027 estimates, which is at a modest 5 percent discount to Hitachi’s valuation, reflecting strong growth potential at relatively attractive valuations.

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Motilal Oswal reiterated its Buy rating on Siemens Energy and raised the target price to Rs 3,300 from Rs 3,000. The brokerage has revised its earnings estimates upward by 13 percent, 6 percent, and 8 percent for FY25, FY26, and FY27 respectively. The brokerage expects Siemens Energy to benefit from a robust addressable market in the transmission and distribution (T&D) segment. It also believes the company's planned capacity expansion in transmission will further support growth. Over FY25–27, MOFSL estimates a compound annual growth rate (CAGR) of 27 percent in revenue and 29 percent in profit.

At about 9:30 am, shares of the company were trading at Rs 3,040, higher by 1.4 percent from the last close on the NSE.

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