Siemens Gets A Downgrade And Target Price Cut On Order Flow Concerns

Nuvama downgraded Siemens Ltd.'s rating to 'hold' and slashed its target price as the company faces challenges in acquiring more orders in its high-voltage current and Railways segment. The brokerage cut the target price to Rs 7,000 from Rs 8,350 apiece, which implied an 8.28% downside from Friday's closing price.

Bulk orders in the HVDC category are likely to get delayed due to preference for line–commutated converters in India, Nuvama said in a note. Hence, the company's total addressable market is expected to significantly contract.

The company has also said it would be focusing on growth in the VSC technology space. Currently, there are two projects in India — Pang-Kaithal in Leh and Khavda-South Olepad — that could use VSC technology, Nuvama said.

In the HVDC space, Siemens has exports opportunity, but it cannot be quantified. Two large orders in HVDC, which are estimated to be Rs 4,000–6,000 crore each, are expected to be finalised in three to six months, Nuvama said.

Siemens is planning to fund total announced capex of Rs 460 crore via internal accruals, the brokerage said.

In the ex-energy segment, large orders for locomotive and trainset also appear delayed with no incremental tenders in near term, the brokerage said. Moreover, Indian Railways might decide to flow-back large orders to its own factories, which further puts a shadow on its long–term growth outlook.

Other businesses of Siemens are yet to see traction from pickup in discom and private sector capital expenditure. This affirms that growth for Siemens may be some time away.

Siemens is now planning to invest in transmission in high–voltage space and non-HVDC. It has announced an additional capital expenditure of Rs 100 crore for large reactors over and above Rs 360 crore capex it announced in November 23 to double the capacity of power transformers. It aims to expand the capacity of transformers from 15,000 million volt-amps to 30,000 MVA by December 2025, Nuvama said.

However, some brokerages maintained their rating on Siemens, while they reduced the target price. Below

Motilal Oswal Financial Services Ltd. retained 'Buy' and revised the target price to Rs 8,000 which implied an upside of 4.82% from Friday's closing price. The brokerage believes that Siemens' ex-energy order inflow will weigh on near-term performance.

Axis Capital kept an 'Add' on Siemens Ltd. and revised the target price to Rs 7,278 from Rs 7,850, which implied a 4.87% downside from Friday's closing price. Siemens' commentary on private capital expenditure and big-ticket order wins will likely remain lackluster.

Axis Capital cuts sales, Ebitda, and earning per share estimates by 9%, 12%, 11%, respectively, for the period financial year 2025 and 2027. The brokerage continued to prefer ABB India Ltd. over Siemens.

Antique retains 'Buy' on Siemens with a target price Rs 8,856 apiece, which implied a 16.03% upside from Friday's closing price. The brokerage believes opportunity canvas continues to remain robust given wide product portfolio.

Antique continues to remain upbeat on business prospects and retain positive view.