Siemens down 3% on profit booking after Q1 results but analysts upbeat

Kotak Institutional Equities has maintained its ‘sell’ rating on shares of Siemens citing expensive valuations. Meanwhile, UBS Securities has given a ‘buy’ rating on the stock with a target price of Rs 4,500

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Shares of Siemens dropped 3 percent on August 9 as investors took some money off the table post its Q1 earnings, however, analysts remain upbeat about the prospects of the company with a strong order book.

At 11:13 am, shares of the company were trading 1.1 percent lower at Rs 3,735 on the BSE.

Kotak Institutional Equities has maintained its ‘sell’ rating on the company’s shares citing expensive valuations. It has valued the stock at 62 times September 2024 Earnings Per Share (EPS).

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Order book

The company’s order inflows of Rs 5,290 crore were up 6 percent year-on-year on a high base, taking the backlog to Rs 45,300 crore. This demonstrates strong revenue visibility, according to Nuvama Institutional Equities. Long term growth drivers for Siemens are in place, according to the brokerage firm.

Nuvama Institutional Equities suggests that the company is favourably positioned compared to its counterparts due to its robust capex pipeline in power transmission and significant potential in the railway sector with the government’s focus to enhance passenger experience, boost dedicated freight corridors to achieve a 40-45 percent modal share which is currently around 27 percent, and improve urban connectivity.

The brokerage firm has retained its ‘buy’ call on the industrials stock with a slight increase in target price to Rs 4,350 from Rs 4,250.

“We continue to remain optimistic about the growth prospects of Siemens, as it is among the most diversified electro-mechanical engineering companies in India, is a technology leader, and has top-of-the-line products,” said Antique Stock Broking.

The brokerage house believes Siemens will be among the most significant beneficiaries of the capex recovery, with potential annual orders reaching Rs 40,000 crore over two-three years, and has hence maintained ‘buy’ rating on the stock with a target price of Rs 4,541 based on 65 times first half of FY25 EPS.

Even UBS Securities has a ‘buy’ rating on the stock with a target price of Rs 4,500.

Siemens’ consolidated net profit rose 52 percent YoY to Rs 455.80 crore in Q1FY24. Revenue was up 14 percent YoY at Rs 4,873.20 crore while EBITDA rose 38 percent to Rs 566.60 crore. EBITDA margin also expanded to 11.63 percent in the June quarter from 9.68 percent a year ago.

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