Siemens Share Can Rally 27%, 'Buy' The Stock Says Motilal Oswal, Revises Target Price — Here's Why

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Motilal Oswal Report

Siemens Ltd. in its FY24 annual report emphasized its strategy to capitalize on the opportunity potential that exists in India from diverse sectors and industries, spurred by favorable government policies, a relatively sanguine macroeconomic situation, and the ongoing global energy transition while also acknowledging the transient hiccups in select segments.

Nevertheless, underscoring its intent to participate in India’s long-term growth potential, Siemens in FY24 announced the expansion of its GIS, vacuum interrupter, power transformer, and metro train manufacturing facilities for a cumulative outlay of Rs 10 billion.

We believe that a selective approach for HVDC projects and weak inflow for ex-Energy segments due to slower-than-expected pick up in private capex may weigh on the near-term performance of Siemens. However, company is well placed to capitalise on expected ramp up in government and private capex over medium to long term.

We downgrade our earnings by 3%/4%/5% for FY25/26/27 and revise our valuation multiple downwards from 70x to 65x on two year forward earnings to bake in a slower pickup in inflows versus our earlier expectations.

We reiterate our Buy rating on the stock with a revised target price of Rs 7,500 (versus Rs 8,000 earlier).

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