Hold Siemens; target of Rs 1450: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss Securities's research report on Siemens

Siemens (SIEM) reported 22% revenue growth for Q3FY17 in continuing business operations (Healthcare was sold recently), led by Energy vertical. For 9MFY17, SIEM’s order intake grew 25% led by certain big ticket size contracts. We expect SIEM to benefit from the broad-based pickup in high-value orders across key sectors, and estimate 19% earnings CAGR over FY16-19, with RoE of ~12-13%. We prefer ABB India and Cummins, given better OPM and cash flow profiles. Rolling over to FY19 valuation estimates, we maintain ‘HOLD” with a revised target price of INR 1,450 (INR 1,322 earlier) .

Outlook

While we are positive on SIEM’s order book and top-line growth over next 2-3 years, we believe OPM scale up will be a key challenge, given project volatility and competition. We estimate 19% earnings CAGR over FY16-19 with RoE of ~13%.  At CMP, the stock trades at 57x & 48x FY18/19E PE. We maintain ‘HOLD/SP’ with TP of INR 1,450 (based on 50x FY19E PE, which is at 20% discount to ABB India).
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