Siemens Shares Jump Over 12% In Four Sessions As Analysts Bet On Growth
Here's what brokerages have to say about the company...
Shares of Siemens Ltd. increased more than 12% in the past four sessions as brokerages turned optimistic on the automation company, citing improved volumes, better margin and digitisation efforts, among others.
The stock rose nearly 8% on Friday, the most in nearly seven months. That's the fourth straight session of gains.
The trading volume was 9.3 times the 30-day average volume on Friday. Of the 29 analysts tracking the company, 15 maintain a 'buy', seven recommend a 'hold' and seven suggest a 'sell', according to Bloomberg data. The 12-month consensus price target implies a downside of 7.1%.
Here's what brokerages have to say about the company...
Equirus Securities
Upgrades to 'add' from 'reduce', hikes target price to Rs 2,280 from Rs 2,040, an implied upside of 5%.
Posted fourth straight quarter of strong volume performance in Q4.
Expects company to deliver Ebitda margin of 12.5%/12.9% in FY23E/FY24E, despite the impact due to commodity inflation and tight supply chain.
High localisation, value addition in automation and digitalisation to drive margin.
Marginally increase earnings per share estimates to factor in resilient volume and margin performance in a challenging environment.
Order inflows across segments remain encouraging.
Economic revival and rising capex spends to aid demand.
Building automation, e-charging infrastructure, pharma, F&B and automotive segments to be key growth drivers.
Nomura
Upgrades to 'buy' from 'neutral', raises target price to Rs 2,555 from Rs 2,355—an implied return of 17.17%.
Improved outlook and potential for Ebitda margin expansion due to the rise in share of services are major reasons for the upgrade.
Rising digital spends to power service expansion.
Combination of PLI, renewable energy integration, energy efficiency, demand of captive power, digital and automation solutions to drive strong growth in FY22 and beyond.
Digitalisation efforts by the company would receive a massive boost with the advent of 5G.
Expects edge technology adoption to accelerate after the 5G rollout.
Increases EPS estimates by 3%/4% for FY22F/23F to account for higher order inflows and sales.
Company score highly on environmental, social, and governance metrics and its offerings help achieve energy efficiency and optimise the use of resources.
Key Risks
Further rise in commodity prices.
Muted private capex and slower-than-estimated adoption of automation and digitalisation by Indian industries.
Motilal Oswal
Maintains 'neutral' with a price target of Rs 2,065—a downside of 6%.
Company's performance in building segment was resilient, while ordering activity declined for the industry.
Rise in capacity levels could lead to newer capex.
Order inflows remained robust, led by short cycle orders resulted in revenue growth.
Healthy order inflow in services segment augurs well for the company.
Quick adoption of digital and automation technologies to aid demand for key digital offerings like operational technology cybersecurity solutions, industrial edge, internet of things solutions, etc.
C&S Electric integration remains on track, with exports being the key thesis. The company has already commenced exports to South Asia.
Expects margins to be on an uptrend over a three-five-year period.
Edelweiss Capital
Maintains 'buy' with a target price of Rs 2,660, an implied return of 21.69%.
Ordering cycle has improved consistently over the past few quarters driven by short-mid cycle product orders from cement-metals, food-beverages and renewables.
Utilisation at 70% implied that large-scale greenfield capex is still some time away.
Remains bullish due to uptick in automation, digital and medium voltage solutions.
Expects the growth cycle for Siemens in the medium-long run to be far better as the economic cycle revives gradually.
Company already witnessed improving traction in data centres, electric vehicle charging segments.
Jefferies
Maintains ‘buy’ but cuts target price to Rs 2,560 from Rs 2,670, still an upside of 17.12%.
The central government's infrastructure spend rising and private sector uptick augurs well for the company.
Lowers FY22E-23E EPS by 2-4% to factor the margin impact on Q4 due to the impact of commodity/logistics costs.
Data centre spend should rise to $1-1.8 billion annually over three-five years.
Several signs indicating that the margin normalisation is ahead for the company; management optimistic of clocking higher margins over the next three-five years driven by market consolidation.
Acquisition of C&S Electric, completed in March has the potential to surprise on the upside.
Exercise of product branding for C&S Electric already underway; cost synergies in the acquisition could add to profits over the next two-three years.