Siemens Energy benefits from India's decarbonization story as, post de-merger from Siemens Ltd. in April 2025, the focus will be to introduce new products and services under the parent Siemens Energy's umbrella.
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Siemens Energy India Ltd. captures the maximum value among its peers as it has products/solutions covering a larger market size, viz., decarbonization, power generation, power evacuation, grid automation, EPC services, and clean energy like green hydrogen and battery storage.
Over the years, this has been a highly profitable business for Siemens India which has clocked 22.6% Ebitda margin during H1 FY25 (five months). With the demerger, Siemens Energy becomes a power pureplay with exclusive rights for some South Asia countries (Bhutan, Nepal, Sri Lanka, and Maldives).
New business lines viz. PEM electrolyzer, hydrogen blend fired gas turbines, and battery storage solutions will aid long-term growth as parent company has developed these technologies.
Siemens Energy's robust order backlog of Rs 150 billion (2.1x FY25E revenue) lends strong growth visibility; we model 30% FY25-27E PAT CAGR. Given the strong cash flows, robust order book, limited competitive intensity, and export opportunities, we rate Siemens Energy as a Buy with a target price of Rs 3,000/share (60 times Sep-27E EPS, P/E in line with our Hitachi Energy multiple).
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