Accumulate Siemens; target of Rs 4572: Prabhudas Lilladher

Prabhudas Lilladher's research report on Siemens

We revise our SY25/26E EPS estimates by +4.2%/4.9% factoring in strong order intake this quarter. Siemens (SIEM) reported healthy consolidated revenue growth of 20.2% YoY, while EBITDA margin declined by 257bps YoY to 12.4% due to lower gross margin and higher other expenses. Demand outlook in India is robust due to rising capex across verticals, led by huge government spending on infrastructure development (railways, roads & highways, etc.) along with private capex entering an upcycle as capacity utilization approaches >80%. Fresh investments are expected across Pharma, Data Centers, Auto, Electronics, Metals, Intralogistics, Chemicals, Water and Cement. Furthermore, growing power requirement in the country is driving demand in T&D and transformers. Opportunities are also arising out of newer verticals such as semiconductors, batteries, and EVs. Moreover, rising focus on manufacturing productivity and energy & cost efficiencies is driving demand for digitalization, automation and cybersecurity solutions.

Outlook

We remain positive on SIEM from a long-term perspective given 1) its strong and diversified presence across industries through focus on electrification, digitalization & automation, 2) product localization, 3) strong balance sheet, 4) healthy public & private capex and 5) focus on cost efficiencies. The stock is currently trading at a P/E of 65.9x/56.6x SY24/25E. We maintain our ‘Accumulate’ rating on the stock with a TP of Rs4,572 (Rs4,359 earlier), valuing it at a P/E of 60x SY25E (same as earlier).