
Siemen's management commentary on a lack of meaningful private capex in India during its recent analyst call sent its shares tumbling 10 per cent on Friday. Stock analysts have largely cut their target prices on the stock and said a lack of near-term triggers in HVDC/Railways segment calls for caution.
Kotak Institutional Equities said it is finding difficulties in predicting FY2025 outlook for Siemens amid sharp volatility in FY2024 across segments and quarters on margin and book-to-bill, a lack of near-term support of large orders and a lack of broad-based uptick in private sector ordering.
"These add another layer of richness to the 86X trading multiple on one-year forward earnings. The endgame of stake transfer in the demerged energy entity is another variable that will play out in FY2025 and beyond," it said.
Nuvama Institutional Equities has slashed its FY25 EPS estimate by 9 per cent, FY26 by 15 per cent and FY27 by 11 per cent to factor in slower HVDC inflows and operating profit margin of 14 per cent. The brokerage has downgraded the Siemens stock to ‘HOLD’ with a target price of Rs 7,000 against Rs 8,350, valuing the stock at 65 times estimated FY27 EPS of Rs 106 per share.
At its Q4FY24 earnings call, Siemens sought to tamper expectations on chunky HVDC orders, which may see delays as India prefers LCC tech against Siemens plans to be only in VSC tech globally. LCC and VSC are both technologies used in High Voltage Direct Current (HVDC) power transmission.
Siemens sees railways orders for locos or trainsets to slow, and the possibility of a higher share going to IR factories. The LV business (Smart Infra – Discoms capex/Digital Infra – private capex), is lacklustre too, Nuvama said.
Nuvama noted that Siemen's energy business delivered EBIT margins of 13.2 per cent in FY24 adjusted for a Rs 70 crore one-off in Q4FY24. This compares with peers such as CGPIL, TRIL and GV T&D registering 15–20 per cent Ebitda margin.
MOFSL said selective approach for HVDC projects and weak inflow for ex-Energy segments may weigh on near term performance of Siemens. This would start recovering when private and government capex revives, it said.
"We slightly lower margin estimates and reiterate BUY rating with a revised target price of Rs 8,000," it said.
While Digital Industries and Mobility segments are impacted by a weak enquiry pipeline from the private sector and delays in railway tenders, Siemens expects the current weakness to be cyclical in nature, MOFSL said.
"Siemens Ltd in its analyst call highlighted growth opportunities from new-age technologies such as semiconductors, batteries, photo voltaic, and electric vehicles amid lower capex by the government and private sectors in 1HFY25. It maintains a positive outlook on the Energy segment mainly in the T&D and Smart infrastructure segment particularly owing to a continued thrust on renewables," MOFSL said.
MOFSL said the demerger of its energy division is on track and after that, the focus will shift to growth for non-energy divisions.
Antique Stock Broking stayed upbeat on Siemens’ business prospects and retain its positive view on the stock with Buy rating and a target price of Rs 8,856 based on a PE of 70 times its expected 1HFY27 earnings. Kotak retained its 'SELL' with largely unchanged operational estimates (below consensus) and roll forward to a FV of Rs 5,000 from Rs 4,500.