Siemens Energy lists at 14% premium: 3 reasons why brokerages expect up to 60% upside
The transmission and distribution pure play stock, Siemens Energy, has listed at 2,840 per share on the National Stock Exchange. This is at a significant 14% premium to the discovered price of Rs 2,478/sh. Siemens demerged in April this year, and the share price has run up considerably to over the Rs 3,000 per share mark. Most brokerages are betting big on the Siemens Energy share price and expect up to 60 times upside in 2 years from now.
Motilal Oswal on Siemens Energy
Motilal Oswal, a key domestic broker, expects Siemens Energy to benefit from a strong addressable market in the T&D business. The brokerage firm expects a revenue growth (CAGR) of 25% over FY25-27 and a net profit increase of 31% during the same time period. Siemens Energy’s EBITDA margins are expected to expand to 21.4% by FY27. Margins have already started expanding in the first five months of FY25.
“We ascribe a multiple of 60x to Siemens Energy and arrive at a price target of Rs 3,000 on September 2027 estimates,” said Motilal Oswal. It resumes coverage on Siemens Energy with a ‘Buy’ rating.
HDFC Securities on Siemens Energy
Siemens Energy captures the maximum value among its peers. The company has products and solutions covering a larger market size, that is, decarbonization, power generation, power evacuation, grid automation, EPC services, and clean energy like green hydrogen and battery storage.
Over the years, the energy business has been highly profitable for Siemens India, which has clocked a 22.6% EBITDA margin during the first half of FY25.
With the spin-off, Siemens Energy becomes a power pureplay with exclusive rights for some South Asian countries like Bhutan, Nepal, Sri Lanka, and the Maldives.
New business lines like PEM electrolyser, hydrogen blend fired gas turbines, and battery storage solutions will aid long-term growth, as the parent company has developed these technologies, said HDFC Securities. Siemens Energy’s robust order backlog of Rs 15,000 crore (2.1x FY25E revenue) lends strong growth visibility. “We model 30% FY25-27 PAT CAGR,” said HDFC Securities.
Given the strong cash flows, robust order book, limited competitive intensity, and export opportunities, the brokerage firm gives a ‘Buy ‘ rating, with a target price of Rs 3,000 per share on Siemens Energy.