Accumulate Siemens; target of Rs 3290: Prabhudas Lilladher

Prabhudas Lilladher's research report on Siemens

We recently attended analyst meet of Siemens India (SIEM) where management indicated, it continues to witness healthy traction in public (driven by metros, infrastructure, airports, railways etc.) as well as private capex (driven by PLI in critical verticals such as semiconductors, data center, EV etc.). SIEMS was able to mitigate impact of supply chain disruption and logistical issue, with focus on sourcing locally (except for semiconductors). EBITDA margins were down 40bps YoY, due to forex volatility and commodity inflation, otherwise margin would have increased by ~110bps YoY to 12.4% in SY22 (September yearend). Recently, investment has been made in Bogie facility at Nashik, which will cater to domestic as well as exports market. Segments such as data center, e-commerce, waste heat recovery, smart infra, digitalization, automation, TBCB, intralogistics, building automation, railway electrification, charging infrastructure, decarbonization, smart metering, smart grids etc. would be key growth drivers going ahead. We remain positive on SIEM from a long-term perspective given its 1) strong and diversified presence across industries, 2) focus on product localization, 3) solid balance sheet and 4) high cash flow. Considering healthy public & private demand outlook, focus on cost efficiencies and expected large orders in mobility segment, we expect revenue/PAT CAGR of 14.8%/22.6% from SY22-SY25E.

Outlook

At CMP, stock trades at 61.9x/52.5x/45.4x FY23/24/25E. We roll forward our TP to Mar’25 with revised TP of Rs3,290 (Rs3,116 earlier), valuing it at 54X Mar’25.