Accumulate Siemens; target of Rs 2602: Prabhudas Lilladher

Prabhudas Lilladher's research report on Siemens

Siemens Ltd (SIEM) reported healthy revenue growth, while profitability was impacted due to higher commodity price and lower forex gain (compared to last year) in Q1SY22. Ordering activity continued to be robust and reported a 65% YoY growth at Rs53bn. OB stands strong at Rs155.6bn (1.2x TTM revenue) providing revenue visibility, going forward. We expect ordering momentum to continue from industries such as Cement, Chemicals, Pharma, F&B, Steel, Railways, Metro etc. while segment such as data center, ecommerce, waste heat recovery, smart infra, digitalization, automation, TBCB, hospitals, sub-station, etc. would be key growth drivers, in our view. Order inflow is likely to be driven by central government and private capex, while state government capex is expected to remainmuted in near term. We remain positive on SIEM from a long-term perspective given its 1) strong and diversified presence across industries, 2) focused digitization, 3) product localization, 4) solid balance sheet and 5) high cash flow. Given the strong order book and enquiry pipeline we expect SIEM to report revenue/PAT CAGR of 14%/23% between SY21-SY24E.

Outlook

The stock is currently trading at 65x/53x/44.5x SY22E/23/24E earnings. We roll over our TP to Mar’24E EPS with TP of Rs2,602 (earlier Rs2,310) valuing it at 52x Mar’24E and maintain ‘Accumulate’ rating on stock.