Accumulate Siemens; target of Rs 4241: Prabhudas Lilladher

Prabhudas Lilladher's research report on Siemens

Siemens (SIEM) reported strong quarterly performance with consolidated revenue up ~14.4% YoY. EBITDA margin expanded 195bps YoY to 11.6%, owing to lower other expenses. We believe that strong traction is likely to continue in high growth verticals such as data centers, railways, chemicals & pharma, e-mobility, waste heat recovery, smart infra, intralogistics, building automation, decarbonization, T&D etc. Order inflows grew 5.9% YoY to Rs52.9bn, driven by base business (up 10.9% YoY) despite some impact on advance ordering in short cycle products. We remain positive on SIEM from a long-term perspective given 1) its strong and diversified presence across industries through focus on electrification, digitization & automation products, 2) product localization, 3) strong balance sheet, 4) healthy public & private capex and 5) focus on cost efficiencies.

Outlook

The stock is currently trading at PE of 69.7x/63.4x/53.5x SY23/24/25E. We maintain Accumulate rating on stock with TP of Rs4,241 (Rs4018 earlier), valuing it at PE of 60x SY25E (57x earlier), factoring in strong outlook and focus on high growth areas such as digitalization, Automation & energy efficiency product offerings.

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