Recently, Siemens (SIEM) held an analyst meet where they discussed the company's growth prospects. The smart infrastructure segment is showing healthy growth, and the mobility segment is expected to see improved revenue growth and margin profile as locomotive delivery begins.
However, there is still uncertainty about when the government, especially the railways, will place orders. Private capital expenditure (capex) revival is also a concern. Due to these factors, we have reduced our estimates by 1%/4%/4% for the next few years to account for lower margins in the digital industries segment.
Despite the challenges, we expect Siemens' revenue, EBITDA, and PAT to grow at a compound annual growth rate (CAGR) of 11%/13%/8% over the next few years. The stock is currently trading at 50.4x/42.2x price-to-earnings (P/E) ratio based on earnings estimates for FY27 and FY28.
The key drivers for earnings and valuation re-rating will be a broad-based capex revival and margin improvement. We have revised our target price (TP) for the stock to INR3,250, down from INR3,350 earlier, based on 45x Dec'27E earnings.
We maintain a Neutral rating on the stock. Before making any investment decisions, it's essential to consult with certified experts and do your own research. Remember, the views expressed by investment experts are their own and not necessarily those of the website or its management.
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