Siemens Energy Shares In Focus As Equirus Initiates Reduce Coverage — Check Target Price

Equirus Securities has initiated coverage on Siemens Energy India with a Reduce rating and a target price of Rs 2,695, citing stretched valuations despite the company’s strong strategic positioning in India’s energy transition.

Following its carve-out from Siemens Ltd, Siemens Energy India has emerged as a pure-play platform spanning the full value chain of power transmission and generation, placing it at the centre of India’s evolving energy landscape.

The brokerage believes the company is well positioned to benefit from a “perfect storm” of structural drivers in the power sector. These include large-scale renewable energy integration that requires grid stabilisation, a renewed cycle of transmission capital expenditure, and a gradual recovery in industrial demand. Together, these factors are expected to provide multi-year growth visibility across Siemens Energy India’s core businesses.

Financial year 2025 (up to September-end) marked a step-change year for the company. Revenues grew 23% year-on-year, while order inflows surged 49%, resulting in a strong order backlog of Rs 16,200 crore. This backlog, which stands at 2.1 times fiscal 2025 sales, provides robust medium-term revenue visibility. On the back of these structural tailwinds, Equirus forecasts a compound annual growth rate of 21% in both sales and Ebitda over financial year 2025 and fiscal 2028.

Power Transmission has emerged as Siemens Energy India’s primary growth engine. The segment contributed 54% of fiscal 2025 revenues and 64% of total orders, driven by strong renewable-led grid expansion and the increasing need for grid stability solutions.

Revenues in the transmission business rose 40% year-on-year in FY25, while Ebitda margins expanded sharply to 20.3%, supported by operating leverage, firm pricing, a favourable export mix, and leadership in complex projects. While transmission ordering is expected to normalise after a strong fiscal 2025, pricing is likely to remain stable as demand continues to exceed capacity additions. Ongoing capacity expansions at Kalwa, Aurangabad and Goa are expected to support a robust 29% CAGR in both sales and Ebitda for this segment over fiscal 2025 and financial year 2028.

In the high-voltage direct current (HVDC) segment, growth opportunities remain selective. India continues to rely largely on line-commutated converter technology for long-distance bulk power transfer, while Siemens Energy globally prioritises voltage source converters for renewable integration.

Despite capability gaps such as reliance on imported insulated gate bipolar transistors, Siemens Energy India is able to meet localisation requirements through domestic manufacturing and local execution. The HVDC pipeline remains steady, with one to two LCC project awards expected annually and VSC projects emerging less frequently.

The Power Generation business provides a stable earnings base, contributing 46% of fiscal 2025 revenues with Ebitda margins of around 18%. This is underpinned by a large installed base of gas and steam turbines that generates steady, high-margin service revenues from India’s thermal and industrial fleet.

While utility-scale steam turbine manufacturing is not localised, the company remains well positioned in industrial turbines, waste-heat recovery and decarbonisation solutions. Optional long-term upside could emerge from nuclear power and electrolyser technologies.

Despite these positives, Equirus believes valuations are stretched. The brokerage has valued the stock at 50 times March 2028 earnings, in line with peers, leading to a cautious Reduce rating as much of the growth potential appears already priced in.