Accumulate Siemens; target of Rs 7030: Prabhudas Lilladher

Prabhudas Lilladher's research report on Siemens

We revise our SY24/25E EPS estimates by +7.1%/13.4% factoring in robust intake & execution and much better profitability. Siemens (SIEM) reported healthy revenue growth of 18.4% YoY and EBITDA margin expansion of 249bps YoY. The board approved demerger of Energy business into a separate listed entity, which will unlock value in both entities by allowing each to focus on its respective market & core portfolio. Energy business will be driven by strong traction in power T&D; Mobility by robust rail & metro capex on signaling, electrification & rolling stock; Smart Infrastructure by investments in data centers, buildings, distribution utilities, & industrial infra (metals, cement, oil & gas, EVs); and Digital Industries by demand for digital adoption & transformation in manufacturing (metals, chemicals, pharma, etc.) 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) value-unlocking from demerger for Energy business.

Outlook

The stock is currently trading at a P/E of 94.0x/76.3x/63.2x SY24/25/26E. We roll forward to Mar-26E and maintain our ‘Accumulate’ rating with a TP of Rs7,030 (Rs4,572 earlier), valuing it at a P/E of 73x Mar-26E (60x SY25E earlier) given strong demand environment and improving margins.