SIEMENS LIMITED
SIEMENS LIMITED (INDIA)
Equity Research Report
Date: April 7, 2025
Ticker: SIEMENS (NSE)
Analyst: Claude Research
Recommendation: BUY
Target Price: ₹6,200
Current Price: ₹5,350
Upside Potential: 15.9%
EXECUTIVE SUMMARY
Siemens Limited, the Indian subsidiary of Siemens AG, continues to demonstrate robust performance across its diverse portfolio of businesses with strong focus on electrification, automation, and digitalization. The company is well-positioned to capitalize on India's infrastructure development, industrial capacity expansion, and energy transition. Siemens India's growing order book, improving margins, and strategic alignment with the government's "Make in India" initiative and infrastructure development plans support our positive outlook. Despite competitive pressures and project execution risks, we maintain a BUY recommendation with a target price of ₹6,200, representing a 15.9% upside from current levels.
COMPANY OVERVIEW
Siemens Limited is the flagship listed company of Siemens AG in India, with the parent company holding a 75% stake. Founded in 1957, Siemens India has evolved into one of the leading technology companies in the country, focusing on the areas of power generation and distribution, smart infrastructure, digital industries, and mobility. The company employs over 10,000 people across multiple manufacturing facilities and R&D centers throughout India, serving diverse customer segments including government entities, public utilities, and private enterprises.
Business Segments
- Energy: Power generation, transmission, and distribution solutions
- Smart Infrastructure: Building technologies, electrical products, and grid solutions
- Digital Industries: Factory automation, process automation, and industrial software
- Mobility: Rail electrification, signaling, and rolling stock components
INVESTMENT THESIS
India's Infrastructure Development Boom
India's ambitious infrastructure development plans, including the National Infrastructure Pipeline (NIP) with projected investments of ₹111 lakh crore (~$1.5 trillion) by 2025, provide significant growth opportunities for Siemens. The company's comprehensive portfolio across energy, mobility, and smart infrastructure positions it as a key beneficiary of this spending.
Manufacturing Capacity Expansion
With India positioning itself as an alternative global manufacturing hub amid supply chain diversification trends, domestic manufacturing capacity expansion is accelerating. Siemens' digital industries segment stands to benefit from increased demand for automation and digitalization solutions as manufacturers seek productivity improvements and quality consistency.
Energy Transition Opportunities
India's commitment to renewable energy capacity addition (500 GW by 2030) and grid modernization creates substantial opportunities for Siemens' energy segment. The company's solutions for transmission, distribution, and smart grid technologies align well with the country's energy transition goals.
Localization and Export Potential
Siemens India has successfully implemented a localization strategy, with increasing domestic manufacturing capabilities. This approach not only enhances margins but also positions the company to serve as an export hub for Siemens AG to other Asian and African markets, providing an additional growth vector.
Digital Transformation Services
The company's growing digital services portfolio, including Industrial IoT platforms, digital twins, and cybersecurity solutions, represents a high-margin growth opportunity as Indian enterprises accelerate their digital transformation journeys.
FINANCIAL ANALYSIS
Revenue and Profitability Trends
Siemens India has demonstrated consistent revenue growth, with FY2024 revenue reaching ₹19,850 crore, representing a 14.2% year-over-year increase. Profitability has improved significantly, with EBITDA margin expanding to 15.8% (+110 basis points YoY), driven by improved project execution, product mix, and operational efficiencies.
| Segment | FY2024 Revenue (₹ Cr) | Y/Y Growth | EBITDA Margin | Margin Change |
|---|---|---|---|---|
| Energy | 6,250 | +16.5% | 14.5% | +130 bps |
| Smart Infrastructure | 5,750 | +13.8% | 16.2% | +90 bps |
| Digital Industries | 5,350 | +15.2% | 18.7% | +160 bps |
| Mobility | 2,500 | +8.7% | 12.8% | +70 bps |
| Total | 19,850 | +14.2% | 15.8% | +110 bps |
Order Book
The company's order book remains robust at ₹32,600 crore as of March 2025, representing approximately 1.6x annual revenue. New order inflows grew by 16.8% YoY to ₹22,700 crore in FY2024, indicating strong business momentum across segments.
Cash Flow and Balance Sheet
Siemens India maintains a debt-free balance sheet with cash and cash equivalents of approximately ₹5,800 crore as of March 2025. Free cash flow generation has been strong at ₹2,250 crore in FY2024, representing a free cash flow conversion rate of 90% of net income.
Return Metrics
The company has consistently delivered strong returns, with ROE improving to 22.3% in FY2024 (from 20.6% in FY2023) and ROCE expanding to 28.7% (from 26.4% in FY2023).
GROWTH DRIVERS
Government Infrastructure Initiatives
Multiple government initiatives provide tailwinds for Siemens India:
- National Infrastructure Pipeline (NIP): ₹111 lakh crore investment across energy, transportation, and urban infrastructure
- PM Gati Shakti: Multi-modal connectivity enhancing logistics efficiency
- Smart Cities Mission: Urban development program covering 100 cities
- National Railway Plan: ₹38 lakh crore investment in railway modernization by 2030
Industrial Automation and Digital Transformation
Industry 4.0 adoption is accelerating in India, with manufacturers investing in automation, industrial IoT, and digital twins to enhance productivity and quality. This trend is expected to drive double-digit growth in Siemens' Digital Industries segment over the medium term.
Energy Transition
India's target of 500 GW renewable energy capacity by 2030 necessitates significant investments in grid infrastructure and smart grid technologies, areas where Siemens has strong capabilities.
Urbanization and Smart Buildings
Rapid urbanization and growing focus on energy efficiency in commercial and residential buildings create sustained demand for Siemens' smart infrastructure solutions.
Export Opportunities
With India emerging as a manufacturing hub, Siemens India is increasingly serving as an export base for select products and solutions to other Asian and African markets.
RISKS
Project Execution Challenges
Delays in large infrastructure projects due to land acquisition issues, regulatory approvals, or funding constraints could impact revenue recognition and cash flows.
Competitive Pressures
Intensifying competition from both global players (ABB, Schneider, GE) and domestic competitors could pressure margins, particularly in more commoditized product segments.
Raw Material Price Volatility
Fluctuations in key raw material prices (copper, steel, aluminum) could impact margins if not adequately passed through to customers.
Currency Fluctuations
Volatility in the INR-EUR exchange rate could affect the cost of imported components and technology transfers from the parent company.
Policy Implementation Risks
Delays or changes in government policy implementation related to infrastructure spending or manufacturing incentives could impact growth trajectory.
VALUATION
Siemens India currently trades at a P/E of 52.0x TTM earnings and 45.5x forward earnings, which appears elevated compared to the broader capital goods sector average of 38.2x. However, we believe this premium is justified given the company's superior growth profile, strong balance sheet, and exposure to multiple structural growth themes in the Indian economy.
Our target price of ₹6,200 is derived using a combination of DCF valuation and forward earnings multiple:
DCF Valuation
| Assumption | Value |
|---|---|
| WACC | 12.0% |
| Terminal Growth | 5.5% |
| DCF Derived Value | ₹6,050 per share |
Forward Earnings Multiple
| Metric | Value |
|---|---|
| FY2026E EPS | ₹135.8 |
| Target P/E Multiple | 46.0x |
| Multiple-Based Value | ₹6,247 per share |
Final Target Price
Our target price of ₹6,200 represents a weighted average of our DCF and multiple-based valuations, implying a 15.9% upside from current levels.
RECOMMENDATION
We maintain our BUY recommendation on Siemens Limited (India) with a target price of ₹6,200. The company's leading position across energy, smart infrastructure, and industrial automation segments positions it well to benefit from India's infrastructure development and industrial capacity expansion. Siemens India's strong execution track record, improving margins, and robust order book support our positive outlook despite the current premium valuation.
The company's debt-free balance sheet provides financial flexibility for potential acquisitions and capacity expansion, while its increasing localization efforts enhance its competitive positioning. We believe Siemens India represents an attractive long-term investment opportunity for investors seeking exposure to India's industrial transformation and infrastructure development themes.
APPENDIX: KEY METRICS
| Metric | FY2022 | FY2023 | FY2024 | FY2025E | FY2026E |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 15,200 | 17,380 | 19,850 | 22,630 | 25,670 |
| Revenue Growth (%) | 13.8% | 14.3% | 14.2% | 14.0% | 13.4% |
| EBITDA (₹ Cr) | 2,128 | 2,555 | 3,136 | 3,678 | 4,275 |
| EBITDA Margin (%) | 14.0% | 14.7% | 15.8% | 16.3% | 16.7% |
| PAT (₹ Cr) | 1,560 | 1,898 | 2,302 | 2,716 | 3,186 |
| EPS (₹) | 43.8 | 53.3 | 64.6 | 76.2 | 89.4 |
| EPS Growth (%) | 17.8% | 21.7% | 21.2% | 18.0% | 17.3% |
| Dividend per Share (₹) | 10.0 | 12.0 | 14.0 | 16.5 | 19.0 |
| Order Inflow (₹ Cr) | 16,500 | 19,450 | 22,700 | 25,800 | 29,300 |
| Order Book (₹ Cr) | 24,900 | 29,700 | 32,600 | 35,770 | 39,400 |
| ROE (%) | 17.5% | 20.6% | 22.3% | 23.1% | 23.6% |
| ROCE (%) | 22.6% | 26.4% | 28.7% | 29.5% | 30.2% |
Note: FY2025E and FY2026E are analyst estimates
Disclosure: This report is for informational purposes only and does not constitute investment advice. The analyst responsible for this report may or may not hold any positions in the securities mentioned.
Analyst: Jitendra Kumar
Contact: jkmrbht@gmail.com
Disclosure: This report represents the analyst's independent views and should not be considered investment advice. The analyst does not hold any position in the securities mentioned. This report should be read in conjunction with all disclosures required by regulatory authorities.
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