At its FY22 annual analyst meet, Siemens indicated strong ordering momentum across business verticals, led by both public and private capex. While the public sector capex are expected in infrastructure investments, strong private sector investments are seen under PLI scheme, particularly in semiconductors, data centres and EVs, analysts who attended the meet suggested.
Post the annual meet, analysts have tweaked their estimates upward for Siemens, but marginally. Their price targets lie in the Rs 3,100-3,550 range, suggesting up to 17 per cent potential upside for the stock.
On Monday, the scrip closed at Rs 3,033.60, up 2.23 per cent.
Nuvama Institutional Equities said it has come back more convinced on Siemens’ mid-long term growth trajectory, near to medium term key variables includes profitability and execution ramp-up in line with SIEMs robust new order intake.
“There is a clear upside visibility in large orders (mobility, transmission led) given current bid pipeline and Siemens’ focus, which in our view should see growth better than its short-cycle business over 12-24 months. Some risks/concerns to our growth assumptions include potential slowdown in large project tenders (pending loco/train-set tenders and large transmission bids), execution delays limiting OPM scale-up prospects,” Nuvama said while suggesting a target of Rs 3,550 on the stock .
This brokerage has Siemens as its top industrial pick, followed by L&T and BEL. Elara Securities sees the stock at Rs 3,490. HDFC Institutional Equities finds the stock worth Rs 3,111.
Though an aggressive quest for growth coupled with investments in portfolio and manufacturing capacity is expected to tell on margins, BOB Capital Markets said Siemens is its top pick in the capital goods sector.
“We expect the momentum to continue given government capex on infrastructure and private capex on key verticals such as semiconductors, data centres and EV. In Mobility business, Siemens is L1 in manufacturing and maintenance order for 9,000HP locomotives, and we expect noticeable contribution to start coming FY25E onwards. Greater demand for automation and digitisation augurs well for the company’s strong digital offerings. We have marginally tweaked our estimates and maintain our ADD rating on the stock due to its consistent performance and favourable outlook on incremental capex,” said ICICI Securities. This brokerage has a target of Rs 3,137 on the stock, up from Rs 3,011 earlier.
Prabhudas Lilladher is positive on Siemens from a long-term perspective. It cites the company’s strong and diversified presence across industries, focus on product localisation, solid balance sheet and high cash flow.
“Considering healthy public & private demand outlook, focus on cost efficiencies and expected large orders in mobility segment, we expect revenue and PAT CAGR of 14.8 per cent and 22.6 per cent from SY22-SY25E. At the prevailing price, stock trades at 61.9 times FY23, 52.5 times FY24 and 45.4 times FY25 EPS. We roll forward our target to March 2025 with revised target of Rs 3,290 against Rs 3,116 earlier, valuing it at 54 times March 2025,” the brokerage said.
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