Accumulate Siemens; target of Rs 3116: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Siemens

Siemens (SIEM) reported healthy quarterly performance, with revenue growing by 11.6% YoY, driven by growth key segments such Smart Infrastructure (up 9.1% YoY), Digital Industries (up 20.5% YoY), Mobility (up 41.8% YoY) and Energy grew (up 3.9% YoY). Despite gross margin expansion (up 224bps YoY), EBITDA margins were impacted due to higher other expenses (up 41.9% YoY). Order inflows continued its momentum and came in at Rs40bn (up 25% YoY), translating to order book of ~Rs172bn. Tendering activity continues to witness increased pace, driven by capex from both public as well as private sector, with increasing interest in digital and sustainability solutions. We believe, segments such as data center, e-commerce, waste heat recovery, smart infra, digitalization, automation, intralogistics, EV charging infrastructure, decarbonisation, smart metering, smart grids etc. would be key growth driver going ahead.

Outlook

We remain positive on SIEM from a long-term perspective given its 1) strong and diversified presence across industries, 2) focus on digitization and automation products, 3) product localization and 4) healthy balance sheet. With strong order book and enquiry pipeline, we expect SIEM to report revenue/PAT CAGR of 15.3%/26.4% between SY22-SY24E. The stock is currently trading at PE of 57.9x/48.9x SY23E/24E earnings. We maintain ‘Accumulate’ rating on stock with TP of Rs3,116 (same as earlier), valuing it at PE of 55x SY24E.