Siemens gets new 'Buy' rating with 15% stock upside; check rationale
Emkay Global projects Siemens' consolidated profit after tax to grow at a compound annual growth rate of per cent, between FY24-25 and FY27-28
 "Siemens gets new 'Buy' rating with 15% stock upside; check rationale")
Emkay Global has initiated coverage on Siemens Ltd., citing its diversified business profile and potential to benefit from the rising demand for energy-efficient and sustainable infrastructure projects.
The brokerage assigned a 'Buy' rating and a target price of ₹3,400 per share, implying about 15 per cent upside based on 50 times its estimated earnings per share (EPS) for December 2027.
The brokerage highlighted Siemens' diversified product portfolio spanning energy efficiency, smart infrastructure, mobility, digital industries and other segments, positioning it as one of the most diversified players in the space.
Emkay Global noted that the company holds a dominant 25-30 per cent market share in building automation and is well placed to benefit from rising demand for energy-efficient and sustainable buildings, airports, data centres and other infrastructure projects.
Mobility is seen as a key growth driver, supported by the government’s strong capital expenditure push in railways. Emkay Global estimates over ₹1.5 trillion of capex opportunities in projects such as Vande Bharat trains, metro rail and Kavach over the next few years.
The brokerage expects profitability in the mobility segment to improve with a pick-up in 9,000-horsepower locomotive volumes and the addition of related service income. Siemens is also expected to benefit from long-term automation and digitalisation trends across industries.
Emkay Global projects Siemens’ consolidated revenue and profit after tax to grow at a compound annual growth rate of 13 per cent and 15 per cent, respectively, between FY24-25 and FY27-28.
While demand has normalised after a sharp post-Covid recovery, the brokerage believes growth momentum will revive as private capital expenditure bottoms out. It added that Siemens' margin expansion potential remains intact, aided by improving operating leverage and ongoing indigenisation initiatives.
The brokerage also noted that Siemens has been approved as a vendor for the Kavach project, which it estimates represents an overall opportunity of about ₹45,000 crore.
A pick-up in execution of the 9,000-horsepower locomotive order is expected to further support margin improvement. In addition, Siemens continues to focus on increasing localisation and expanding exports by leveraging C&S Electric’s global presence in the low-voltage product segment, Emkay Global said.
Siemens share price history
The company's stock rose as much as 1.4 per cent during the day to ₹2,888.6 per share. The stock pared gains to trade 1 per cent higher at ₹2,883 apiece, compared to a 0.28 per cent decline in Nifty 50 as of 12:21 PM.
The Siemens counter has fallen 5.8 per cent this year, compared to a 3.8 per cent advance in the benchmark Nifty 50. Siemens has a total market capitalisation of ₹1.02 trillion.
==========
(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)