Siemens Gets a Buy Rating, Target Price Set at Rs 3750: Prabhudas Lilladher

Siemens Reports Soft Quarter, Prabhudas Lilladher Downgrades Rating

Siemens (SIEM) recently reported a soft quarter with revenue increasing 14.6% year-over-year (YoY) to Rs46.2 billion. However, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin contracted 287 basis points (bps) YoY to 9.7% due to Indian rupee depreciation, elevated commodity prices, and supplier-led inflation.

The company has implemented price hikes across its Distributed Intelligence (DI) and Smart Infrastructure (SI) businesses, with benefits expected to flow through over the next 3-4 months. Siemens reported strong order momentum with inflows of ~Rs67 billion in Q6FY26 (including a ~Rs18 billion bogie, traction motor, and gearbox order from the parent company) and a record backlog of ~Rs450 billion, supported by broad-based demand across industrials, railways, data centers, and semiconductors.

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The company's management remains constructive on India's capital expenditure (capex) cycle, with no visible slowdown across private or public investment. Distributed Intelligence (DI) saw normalized operations with healthy order traction from core industrial segments, while SI continued to benefit from electrification, renewables, and data centers, though both segments faced input-cost and currency-related margin pressure.

Mobility remained the key growth driver, supported by the execution of the 9K HP locomotive programme with 40 locomotives dispatched and a clear ramp-up trajectory (~80 p.a. over the next 2 years, ~100 p.a. during FY28-30, and ~160 p.a. during FY30-35). Furthermore, the long-term bogie order executable over FY29-39 with built-in escalation protection reinforces the company's growth prospects.

The stock is currently trading at 63.2x/52.8x on the earnings of FY27/FY28E. Prabhudas Lilladher has rolled forward to Mar'28E and downgraded its rating from 'Accumulate' to 'Hold' given the recent rally in the stock price. The brokerage firm values the stock at a price-to-earnings (PE) ratio of 51x Mar'28E, arriving at a target price of Rs3,750.